The ideas of classical economists

Dry James Anagram Synopsis The purpose of this work is to examine and understand the principal(prenominal) thoughts of prominent economists during the classical intent, namely tenner Smith, doubting Thomas Malthusian, David Richard, Jeremy Beneath and John Stuart mess about. It is also included the comparison of ideas between these masters and last entirely not least, the contributions of these Ideas In todays context.At the beginning, the background of the classical period Is provided to ensure that readers have a better understanding of the economists ideas. Followed by that, separately economists ideas will be discussed respectively, and the comparison will be made. The contributions of ex Smith, David Richard and Thomas Malthusian will be discussed in the last part and conclusion would be drawn. Content Page No.Page number Introduction 4 2 Background 3 The 5 Prominent Economists decade Smith Thomas Malthusian David Richard Jeremy Beneath John Stuart Mill 5 6 7 Comparison of Ideas between the Five Economists 8 Contributions of Classical School in Contemporary 9 Conclusion 10 Bibliography 11 Appendices 12 Classical school started during the late 18th century, when go game Smith published his independent field of study and set forth the development of modern frugals. Their ideas such as division of labor and comparative advantages argon still discusses and implied in todays world.The work of this paper is to examine the main thoughts of five leading economists of classical period, namely Adam Smith, Thomas Malthusian, David Richard, Jeremy Beneath and John Mill and to compare their thoughts and concepts. Also, the relevance of contributions of their ideas in todays context will be discussed. Background Before classical period there was commerce period (1500 1776). During that time, manipulations and brass handling in the market is being practiced. Wealth of a nation is weighed in scathe of gold and silver that a country possessed.Therefore mul tinational trade is demoralised by the implementation of tariff, in order to pr veritable(a)t wealth flowing to different countries. However, as scientific revolution and industrial revolution take place, it helps to kindle the ideas of classicists. (Refer appendix 1 for influence of scientific revolution) There are a few main features in classical economics thoughts. Firstly, classical economists advocate unblock trade in rake. Without government intervention, the economy could self-adjust to achieve full employment. Secondly, each party, I. E. He merchants, workers and consumers will each seek self-benefit as it is in the human nature. Hence, concurrence of interests will be achieved when the pursuit of self-interest will eventu exclusivelyy leads to the best interest of the society. Thirdly, classicists consider all economic resources such as land, labor, capital and entrepreneurship as the nations wealth and lastly, the classicists made a remarkable contribution to economic s by explaining economic horses explicitly. Adam Smith (1723 1790) is often regarded as the father of modern policy-making economy.In his life he had written two books, The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations. Moral Sentiments discussed the moral forces that restrain selfishness and bind people in concert in a workable society Wealth of Nations assumed the existence of a Just society and showed how the individual is guided and limited by economic forces. (Bruce and Grant, 2007 p. 62) Adam Smith economic ideas are something of a novelty during his time. He introduced the idea of division of labor, which in todays word means specialization.By practicing division of labor, the productivity could be attachd as (1) workers skills are enhanced when they perform only one single task, (2) time for changing work task from one to another is saved, and (3) figure of machines could help increasing productivity once tasks have been si mplified and made routine. (Bruce and Grant, 2007). Another idea being maneuvered out by Smith is the harmony of interest. When all parties in a economy is seeking their self-interest, the natural order of the oral will eventually channel it to become social good.The key behind this multifactorial mechanism is the concept of competition. Thus, Smith opposed government intervention in the market for the corruption and favoritism will leads to monopoly and competition will fail. This also implies in transnational trade. Smith thinks that have an advantage in and trades it with other countries. Although Smith is against government involvement in the economy, he did suggest a few roles that government could play in the economy. (Refer to appendix 2) When talk about value, Smith is of he opinion that whole tonement of value should be labor.The value of any commodity to a person, who possesses it, if he wishes to exchange it for other commodities, is equal to the quantity of labor whi ch it enables him to purchase or command. Labor, therefore, is the real measure of the exchangeable value of all commodities. (Bruce and Grant, 2007p. 72) However, Smith did notice that there are practical and theoretical difficulties in this surmise. (Refer appendix 3 for further details) Thomas Malthusian (1766 1834) advanced the population theory in his event An Essay on the Principle of Population.He states that population will increases at a geometric rate when unchecked while subsistence would only increases at best arithmetical rate. He suggested 2 types of checks, first is tour checks which are those that reduce the birth rate and second, positive checks which are those that increase the shoemakers last rate, to control population growth. share of Malthusian ideas were adopted when the Poor Law Amendment of 1834 was passed. In his later work Principles of Political Economy, Malthusian came out with the theory of market gluts. He suggested that insufficient remove wou ld occur due to inequality of distribution of income.Due to that, spending by landlords is important to prevent a glut of goods on the market which would turn into economic stagnation. (Bruce and Grant, 2007) David Richard (1772 1823) is a influential figure in the field of economics. He is hailed as the economists economist for his extraordinary contributions in economics. The man who only had 14 years of formal information addressed economic matters academically. One of his main thoughts is the theory of free trade and from here derived the law of comparative costs, also known as law of comparative advantage.He explained that a person or country should gain goods which they can produce t a humiliate opportunity cost as compared to their competitors. In doing so, they would be more efficient and when traded with another country that practices the same theory, would achieve mutual benefit. Taking Turbots concept of diminishing returns in agriculture, Richard used it to develop h is theory of lock and introduced the law of diminishing returns. The law says that as the number of factor of production I. E. Labor increases, assuming sisters Paramus, the marginal product will at some point diminish.In the discussion of value, Richard said that a commodity must have use alee if it is to have exchange value. The use value of a commodity is derived from their scarcity and also the quantity of labor requires in captureing it. Although utility is vital, it is not a measurement of exchange value. Time needed for producing the good and obtaining the raw material to produce the good is the exchange value for a commodity, according to Richard. The minimization of a persons pleasure, advanced the principle of utility.This notion is that people pursue things that provide pleasure and subdue things that produce pain all individuals seek to maximize their total pleasure. Bruce and Grant, 2007p. 122) Unlike hedonism, Beneath added the ethical doctrine into utilitarianism t hat human action should direct to the superior merriment of the greatest number of people. For that reason, Beneath was very active in social reforms. He supported free education for all, right for women, abolition of slavery and death penalty and many more. The major problem with Bantams utility theory was that pleasure, a kind of emotion could not be quantify or measure.He tried to measure it using the Felicia Calculus, but he himself acknowledged the flaws in his calculation. John Stuart Mill who attended home schooling had his father, James Mill as his teacher. As a result, he got influenced by Bantams thoughts of utilitarianism, as his father is a close friend to Jeremy Beneath. He further enhanced the utilitarianism concept, stating that enjoyment ought to be viewed in terms of not only quantity but also quality. (Anagram, 2012) His publication, Principles of Political Economy summarizes and fused all the economic knowledge up to his day.His discussed various troubles from production to planetary trade. His most important and original contribution is the law of international values. He implied the elasticity of demand for goods in his theory and successfully showed that the real exchange equipment casualty takes into account not only the domestic costs, but also the elasticity of demand for each product abroad. Comparisons of Ideas between the Five Economists After reading the main thoughts of the five economists, we can see the evolution of economic thoughts in the timeline.The masters each have their own explanation on various topics, sometimes agreeing with each other and other times which they argued. From a bigger picture, we can depict that the ideas during the early period of lassie period varies from ideas of those in the end of classical period. For example, Adam Smith proposed laissez-fairer with minimal government involvement as the invisible hand in the market would eventually move the market to its equilibrium stage. However, Jeremy Ben eath, who holds the idea of the greatest happiness for the largest number of people, thinks that government should overlook the economy and social policy.In international trade issue, Adam Smith explained that export could remove surpluses in market but it could be done only when a country has absolute advantage in producing the particular goods. It was Richard then who argued that country could still benefit from trade even without absolute advantage. He introduced the theory of comparative costs, which is a situation when a country could produce certain goods with relative lower opportunity cost than the other country, and trades between them would still benefit each other.Mill supported Orchards view of international trade, and further elaborated it by the law of international values. Mill said that the international price of trade is determined by the elasticity of demand of the product. Mills theory is important as it overcome the economy. On the topic of value, Adam Smith lay his concern in value of exchange. He explained that the measurement of value should be labor and in exchanging commodities, both commodities should have equal quantity of labor to obtain it. As for Richard, he defined exchange value must have use value.The use value of a good is derived from its scarcity and also song of labor needed to obtain it. Richard then argued that exchange value of a good rely not only on the time used by labor to produce it, but also the time taken to obtain raw materials and capital goods which s used in the production process. In examining Thomas Malthusian ideas, the work of a very controversial man during his time, we could see that his works are favored by the wealthy landlords and on the other hand, pushed the lower classes the poor people into a deeper pit.In his population theory, he states that population when unchecked increases geometrically, while subsistence increases at best arithmetically. Therefore, to control the population growth there is preventive checks and positive checks. Richard, who is a close friend to Malthusian, argued that the theory s untrue and as a matter of fact, as years go by, the increment of food production is higher than increment of population growth. Contributions of the Classical School in Contemporary It is undeniable that the ideas of classical economists are a breakthrough in the mercantilism period and set forth the foundation of modern economic studies.Their works, being influenced by the scientific revolution, seeks experimental evidence to support and verify their ideas thus increase the credibility of their works. Below are three economists that made lasting contributions to the economic until today 1 . Credited with the title father of modern political economy, Adam Smith thusly had made a huge impact in transformation of economy from mercantilism to free market. The most valuable idea that he leave for us would be the harmony of interest.The key behind the mechanism that brought all self-interest seeking behavior to become a social good, usually also known as the invisible hand, is the concept of competition. It is because of competition that producers are restrained from making extra profit and hence drives down the price of goods. This theory is still recognized n todays economy. 2. David Richard Richard made a significant contribution with his theory of comparative advantage that served as a cornerstone in todays international trading policies.Although it was later refined by John Mill, nevertheless credits should still be given to this man. 3. Thomas Malthusian Despite being a controversial figure and his theories favor the upper class of the society, Thomas Malthusian still made some contributions to the contemporary economy. It was through his notions that the population growth issue is being concerned and later developed to be a formal study. It was his work regarding market gluts that later catches Keynes attention and expanded it. The classical s chool of thoughts indeed is an essential period in the history of the economical behavior of the society.