the ideas of classical economists and its present contributions

Topics: Economics, Adam Smith, John Stuart Mill Pages: 13 (2641 words) Published: May 29, 2014
The Ideas of Classical Economists and its
Present Contributions

Student ID: B1001804
Lecturer : Dr James Nayagam

Synopsis
The purpose of this work is to examine and understand the main thoughts of prominent economists during the classical period, namely Adam Smith, Thomas Malthus, David Ricardo, Jeremy Bentham and John Stuart Mill. It is also included the comparison of ideas between these masters and last but not least, the contributions of these ideas in today’s context. At the beginning, the background of the classical period is provided to ensure that readers have a better understanding of the economist’s ideas. Followed by that, each economists ideas will be discussed respectively, and the comparison will be made. The contributions of Adam Smith, David Ricardo and Thomas Malthus will be discussed in the last part and conclusion would be drawn.

Content Page
No.
Title
Page number
1
Introduction
4
2
Background
4
3
The Five Prominent Economists
Adam Smith
Thomas Malthus
David Ricardo
Jeremy Bentham
John Stuart Mill

5
6
6
7
7

4
Comparison of Ideas between the Five Economists
8
5
Contributions of Classical School in Contemporary
9
6
Conclusion
10
7
Bibliography
11
8
Appendices
12

Introduction
Classical school started during the late 18th century, when Adam Smith published his work, Wealth of Nations. It is a very important work that established economics as an independent field of study and set forth the development of modern economics. Their ideas such as division of labour and comparative advantages are still discusses and implied in today’s world. The work of this paper is to examine the main thoughts of five leading economists of classical period, namely Adam Smith, Thomas Malthus, David Ricardo, Jeremy Bentham and John Mill and to compare their thoughts and concepts. Also, the relevance of contributions of their ideas in today’s context will be discussed. Background

Before classical period there was mercantilist period (1500 – 1776). During that time, monopolizations and government intervention in the market is being practiced. Wealth of a nation is weighed in terms of gold and silver that a country possessed. Therefore international trade is discouraged by the implementation of tariff, in order to prevent wealth flowing to other countries. However, as scientific revolution and industrial revolution take place, it helps to nurture 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 free trade in market. Without government intervention, the economy could self-adjust to achieve full employment. Secondly, each party, i.e. the merchants, workers and consumers will each seek self-benefit as it is in the human nature. Hence, harmony of interests will be achieved when the pursuit of self-interest will eventually leads to the best interest of the society. Thirdly, classicists consider all economic resources such as land, labour, capital and entrepreneurship as the nation’s wealth and lastly, the classicists made a remarkable contribution to economics by explaining economic theories explicitly.

The Five Prominent Economists
Adam Smith
Adam Smith (1723 – 1790) is often regarded as the father of modern political 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 together 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.(Brue and Grant, 2007: p.62) Adam Smith economic ideas are something of a novelty during his time. He introduced the idea of division of labour, which in today’s word means...

Bibliography: 1. Brue, S.L. & Grant, R.R. (2007) The History of Economic Thought. 7th ed. United States: Thomson.
2. Ekelund, R.B. & Hebert, R.F. (2007) A History of Economic Theory and Method. 5th ed. Illinois: Waveland Press.
3. Giuseppe. (2009) Tenets of Classical Economics, 31 Jan [Online]. Available at: http://www.politonomist.com/tenets-of-classical-economics-00875/ (Accessed at: 12 August 2012)
4. Rothbard, M.N. (2012) Jeremy Bentham: From Laissez-Faire to Statism. An Austrian Perspective on the History of Economic Thought, 16 Feb [Online]. Available at: http://mises.org/daily/5870/ (Accessed: 11 August 2012)
5. Nayagam, J. (2012) The Classical School(2): The Thoughts of David Ricardo; Bentham; Say; Senior and John Mill. Kuala Lumpur: HELP University College.
Appendix:
1. According to the classicists, the lingering feudal institutions and the restrictive controls of mercantilism were no longer necessary…. If the Divine Will had created a mechanism that worked harmoniously and automatically without interference, then laissez-faire was the highest form of wisdom in social affairs. Natural laws would guide the economic system and the actions of people. (Brue and Grant, 2007:p.45-46)
2. Specifically, he saw three major funtions of government: (1) to protect society from foreign attack, (2) to establish the administration of justice, and (3) to erect and maintain the public works and institutions that private entrepreneurs cannot undertake profitably. (Brue and Grant, 2007:p.70)
3. It is often difficult to ascertain the proportion between two different quantities of labour… But it is not easy to find any accurate measure either of hardship or ingenuity. (Ekelund and Hebert, 2007:p.109)
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