Written Assignment One: Influential Economists
Adam Smith, David Ricardo and John Stuart Mill are all economists that came from the era of classical economics. This era has been said to be the first school of economic thought which consists of theories and ideas that soon became political economy and economics from the earliest days. Smith, Ricardo, and Mill have created and implemented theories that still exist in present day economics.
One conjecture that Smith, Ricardo, and Mill had in common was the belief in the market system. They each felt that we needed an economic system in which prices and wages are determined by unrestricted competition between businesses, without government regulation or fear of monopolies, also known as a free market (Dictionary.com). Each economist added their own theories and ideas to how this market or economy should function.
Adam Smith (1723-1790) is known today for his beliefs of how balanced self-interest in a free market economy leads to economic well-being.For a free market to operate well, one must think about what others want. The invisible hand, Smith’s theory, is the power that guides capitalism through competition for scant resources. This theory states that individuals will try to maximize self-interest, leading to the exchange of goods and services, allowing individuals to be wealthier than before. He said, “It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest” (The Concise Encyclopedia of Economics). Smith is stating that everyone wants to be successful, and in order to gain prosperity one must exchange what he owns or produces with others who value what he has; thus, public interest is advanced and competition increases which in return stimulates the free market.
David Ricardo (1772-1823) was inspired by the writings of Adam Smith. He too, strove for a free market and...