Wealth

Adam Smith was a classical economist. His wealth definition is otherwise known as the classical definition of economics. According to Adam Smith, “Economics is a science of wealth.” That means earning and spending of wealth is the subject-matter of economics. The full name of Adam Smith’s book clearly defines what economics is. That is economics studies the “nature of wealth” and “causes of wealth.”

The followers of Adam Smith accepted and propagated this definition. According to J. S. Mill, “Political Economy professes to teach or investigate the nature of wealth and the laws of its production and distribution.” The American economist F.A Walker defined, “Political Economy or Economics is the name of that part of knowledge which relates to wealth.”

In short, most of the classical economists regarded economics as a science dealing with wealth. Then the next important questions is, what is wealth? According to the classical economists. Wealth refers to those goods having the following characteristics:

• Wealth refers to only material goods.
• Material goods must be scarce in relation to demand.
• Free goods like air, sunshine etc. are not wealth as they do not possess scarcity.