Definition of Smith (Wealth Definition)

Adam Smith (1723 – 1790), in his book “An Inquiry into Nature and Causes of Wealth of Nations” (1776) defined economics as the science of wealth. He explained how a nation’s wealth is created. He considered that the individual in society wants to promote only his gain. In this, he is led by an “invisible hand” to promote the interests of the society though he has no real intention to help society’s interests.

Criticisms

Smith defined economics only in terms of wealth and not in terms of human welfare. Ruskin and Carlyle condemned economics as a ‘dismal science,’ as it taught selfishness, which was against ethics. However, now, wealth is considered only to be a means to end, the end being the human welfare. Hence, wealth definition was rejected, and the emphasis was shifted from ‘wealth’ to ‘welfare.’