Wealth definition of economics by Adam Smith

April 18, 2016
Adam Smith (1723 -1790)

Because of the classical definition and criticism a lot of misconceptions were created. Which badly effect the development of economics? Nobody had the courage to define economics because of the fear of that kind of criticism to which Adam smith was faced.

A British economist Alfred Marshall wrote a book in 1798 "Principles of economics" at this stage. He tried to remove the misconception and put economics on the road of development.

1. Alfred Marshall's Definition

"Economics is the study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected and social action which is most closely connected with the attainment and use of the material requests of wellbeing."

Marshall the founder of neo-classical school of thoughts or welfare school of economics and his followers are of the view that on the one hand economics is the study of wealth and on the other hand it is the study of man who is more important than wealth. Further they are of the view that materials welfare is the primary aim of economics. So economics is the study of material welfare.

To elaborate Marshall's definition we discuss the main points:-

1.1. Study Of An Ordinary Man

According to Marshall Economics does study of an ordinary man who lives in society is not the subject of study of economics.

1.2. Wealth Is Not The Be All And End All Of All Human Activity

Economics does not regard wealth the be all and the end all of the human activity. Wealth is only a mean to the fulfillment of an end which is human welfare, so welfare and not wealth is, therefore of primary importance to man.

1.3. Study of all Activity of Men

It does not study all activities of men people perform different activates while living in a society. There are different subjects to cover different activities i.e. Sociology for social activities, political science of political activities, physical education for sports activities. etc. but economics deals with the economic activities of human beings living in a society.

1.4. Study of Material Welfare

economics only studies the ways in which man applies his knowledge and skill to the gift of nature for the satisfaction of this material welfare and ignores non-material aspects. According to Marshall's economics is the study of material welfare. He says each man applies his knowledge, uses his skill for the satisfaction of his material welfare and economics has nothing with immaterial thing.

1.4.1. Exception 3:-

Economics does not study all activities of men. It studies the activity of a man which is an economics activity of human beings living in a society.

1.4.2. Exception 4:-

Economics only studies the material welfare. According to Marshall economics is the study of material welfare. He says each man applies his knowledge, uses his skill for the satisfaction of his material welfare and economics has nothing with immaterial thing.

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