Wealth Definition — Adam Smith

Adam Smith, widely regarded as the father of modern Economics, set out his view of the subject in his 1776 work An Inquiry into the Nature and Causes of the Wealth of Nations. Later writers summarised his approach in one line: "Economics is the science of wealth."

On this view, Economics studies the causes behind the wealth of nations — specifically how wealth is produced, exchanged, distributed, and consumed. Smith argued that a nation grows wealthy through division of labour, free trade, and the accumulation of capital, and that a country's wealth is best measured by what it actually produces (its goods and services), not merely by the gold and silver it holds — a mercantilist idea Smith was directly arguing against.

Main features of the wealth definition:

• Economics is treated as a science of wealth — its central subject matter is the creation and use of wealth.
• It studies four broad processes: production, exchange, distribution and consumption of wealth.
• Man is viewed mainly as an economic being motivated by self-interest, seeking to maximise wealth.

Criticisms of the wealth definition:

• Narrow and materialistic — it appears to reduce Economics to a study of money and material goods, ignoring human welfare, happiness, and non-material aspects of life.
• It made Economics look like a "selfish" science, built around a wealth-seeking "economic man" — this led critics such as Thomas Carlyle and John Ruskin to famously (and somewhat unfairly) call Economics a "dismal science." …