ICS FA ICom Notes Class XI Principles of Economics Smith’s Definition of Economics

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Smith’s Definition of Economics “Science which enquires the nature and cause of the wealth of nations.”

CRITISM

Actually speaking the definition given by Adam Smith had been boldly criticized on the following grounds:

1. One Sided Definition

It was the one sided definition because of only wealth had been taken in to consideration while “humans” were neglected who are equally important in the discussion of economics.

2. Emphasis on Wealth

According to this definition, wealth was given to much concentration on wealth that destined man selfish and illustrious. Therefore the social reformers raised voices against this definition.

3. End Or Mean

Wealth was taken as end by itself and not a mean to an end. This concept is wrong because wealth is the source of satisfaction and satisfaction by itself. It is a mean not an end while it is for man and man is not for wealth.

4. Narrow Sense of Wealth

The term wealth was interpreted in a very narrow sense. Wealth meant something tangible, visible and concrete object, which is capable of satisfying human, needs thus all the intangible goods and services which provide to human being were completely ignored.

5. Limited the Scope

According to the classical definition, “Science of wealth” was regarded as a subject matter of economics had been left out from its study. Only the people engaged in production and consumption were studied under this definition.