The famous book An Inquiry into the Nature and Causes of Wealth of Nations was written by Adam Smith. Adam Smith stated, “Economics is concerned with an enquiry into the nature and cause of wealth of nations, and it is related to the laws of production, exchange, distribution and consumption of wealth.”
Features of the Wealth Definition of Economics
Exaggerated emphasis on wealth: This definition gave too much importance to the creation of wealth in an economy. Many economists believed that economic success of any nation depended only on the accumulation of it.
Inquiry into the creation of wealth: This definition indicates that Economics also deals with an inquiry into the causes behind the creation of it. For example, wealth of a nation may be increased by raising the level of production and export.
Study on the nature of wealth: This definition further explored that the wealth of a nation included only material goods; for example, different manufactured items. Non-material goods were not included. Hence, non-material goods such as the services of teachers, doctors and engineers are not considered „wealth‟.
Economic Man: This definition is based on the man who is always self-centred and self-interested in nature. Economic Man focused on his own well-being and had only one motive—to earn money.
Materialistic concept: This definition laid too much emphasis on wealth and did not consider human welfare. But it is only one of the many means for human pleasure and welfare. Hence, this
definition is neglected.
Ambiguous: The definition of wealth is not very clear. In earlier days, it included only material goods such as money, gold, silver, land, sugar, tea and ghee which are visible. Non-material goods were not included. Hence, non-material goods such as services of teachers, doctors and engineers are not considered „wealth‟ under this definition.
Narrow scope: This definition claims wealth as the only subject of Economics and does not study the concept of welfare. Therefore, it is considered incomplete and narrow.
Stress on the concept of Economic Man: This definition is based on the concept of Economic Man which emphasized that the main motive of a man is to acquire wealth. However, other motivations of a man like feeling affection and emotions are neglected.
Scarcity and choice: This definition ignores scarcity and choice, which are important concepts of Economics. In the real sense, economic activities occur because goods and services satisfying human wants are scarce in nature for innumerable uses.
Importance of man ignored: The definition by Adam Smith gives unnecessary importance to wealth
leaving aside the importance of human beings.
Economic and Non-economic Activities
An economy is a system which provides people with goods and services and directly or indirectly satisfies their wants.
Economic activities are the set of activities carried out by human resources to satisfy their needs. It is essentially concerned with the production, exchange and consumption of goods and services. For example, businessmen may make a profit or experience a loss, while labourers receive wages and salaries as a remuneration of services rendered by them.
Activities which have no economic elements or are not concerned with money and wealth are known as
non-economic activities. There are various types of non-economic activities such as social activities, political activities, religious activities, charitable activities, parental activities and recreational activities. Examples of social activities are organizing marriage parties, attending birthday parties of friends and relatives, while examples of political activities are meetings of various political parties such as the Congress, BJP and ADMK.
Definitions of Economics
Social Science is a branch of science which studies how societies are organized and function. Various Social Science branches include Sociology, Anthropology, Psychology, Economics and Political Science. Every branch studies the organization and functioning of society from its perceptive.
Economics studies the economic behaviour of individuals and organization in society. It also studies individuals and organizations engaged in economic activities concerned with the production, distribution and consumption of goods and services. Hence, Economics is regarded as the queen of all social sciences.
Meaning and Definition of Economics