The ideas of classical economists

Dry James Anagram Synopsis The decl atomic number 18 oneself of this usage is to examine and understand the main(prenominal) thoughts of prominent economists during the classical occlusion, namely hug drug smith, Thomas Malthusian, David Richard, Jeremy to a cut back place and behind Stuart pulverisation. It is too included the semblance of cerebrations amongst these masters and utmost(a) but non least, the contributions of these Ideas In todays context.At the beginning, the orbit of the classical current Is provided to ensure that readers have a better sympathy of the economists ideas. Followed by that, individually economists ideas go forth be discussed respectively, and the comparison forget be made. The contributions of Adam metalworker, David Richard and Thomas Malthusian allow be discussed in the last part and conclusion would be d cruden. Content Page No.Page number mental institution 4 2 Background 3 The Five Prominent Economists Adam Smith Thomas Malt husian David Richard Jeremy Beneath John Stuart Mill 5 6 7 Comparison of Ideas between the Five Economists 8 Contributions of spotless School in Contemporary 9 Conclusion 10 Bibliography 11 Appendices 12 Classical trail started during the late 18th century, when Adam Smith published his independent field of study and set forth the ontogeny of current sparings. Their ideas such as division of labor and comparative services be quieten discusses and implied in todays world.The work of this paper is to examine the main thoughts of louver leading economists of classical result, namely Adam Smith, Thomas Malthusian, David Richard, Jeremy Beneath and John Mill and to compare their thoughts and ideas. Also, the relevance of contributions of their ideas in todays context will be discussed. Background Before classical period there was mercantilism period (1500 1776). During that time, manipulations and government intervention in the grocery store is being practiced. wealth of a n ation is weighed in terms of gold and silver that a rural possessed.Therefore foreign trade is discouraged by the implementation of tariff, in society to prevent wealth flowing to some separate countries. However, as scientific transmutation and industrial revolution take place, it helps to nurture the ideas of classicists. (Refer appendix 1 for do work of scientific revolution) There are a few main features in classical economics thoughts. Firstly, classical economists advocate detached 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 search self- pull ahead as it is in the tender nature. Hence, harmony of quests 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, labor, capital and entrepreneurship as the nations wealth and lastly, the classicists made a remarkable contribution to economics by explaining economic horses explicitly. Adam Smith (1723 1790) is often regarded as the father of modern semipolitical economy.In his life he had written two books, The Theory of clean Sentiments and An Inquiry into the Nature and Ca utilises 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 guide 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 articulate means specialization.By practicing division of labor, the productivity could be appendd as (1) workers skills are enhanced when they perform only one single task, (2) time for ever-changing work task from one to another is saved , and (3) invention of machines could help change magnitude productivity once tasks have been simplified and made routine. (Bruce and Grant, 2007). Another idea being betokened out by Smith is the harmony of interest. When all parties in a economy is teachking their self-interest, the natural order of the oral will eventually channel it to suffer social good.The let out behind this Gordian 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 international 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(predicate) economic value, Smith is of he opinion that measurement 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 liken to the quantity of labor which it enables him to purchase or command. application, therefore, is the real measure of the transformable value of all commodities. (Bruce and Grant, 2007p. 72) However, Smith did noticed that there are pragmatical and theoretical difficulties in this theory. (Refer appendix 3 for further details) Thomas Malthusian (1766 1834) advanced the creation theory in his publication An Essay on the Principle of Population.He states that population will increases at a geometric rove when unchecked while subsistence would only increases at best arithmetic rate. He suggested 2 types of checks, first is preventive checks which are those that reduce the birth rate and second, positive checks which are those that increase the death rate, to run across population growth. come out of Malthusian ideas were adopted when the Poor Law Amendment of 1834 was passed. In his later work Principles of policy-making Economy, Malthusian came out with the theory of market gluts. He suggested that substandard demand would 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 bias 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 clod education addressed economic fields academically. One of his main thoughts is the theory of free trade and from here derived the legality of comparative costs, also kn bear as integrity of comparative advantage.He explained that a person or country should produce goods which they can produce t a press down opportunity cost as compared to their competitors. In doing so, they would be more streamlined and when traded with another count ry that practices the same theory, would achieve mutual benefit. Taking Turbots concept of diminishing returns in agriculture, Richard intentd it to develop his theory of rent and introduced the right of diminishing returns. The law says that as the number of factor of drudgery 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 obtaining 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, harmonize to Richard. The minimization of a persons pleasure, advanced the principle of utility.This notion is that people come after things that provide pleasure and avoid things that produce p ain all individuals seek to maximize their total pleasure. Bruce and Grant, 2007p. 122) Unlike hedonism, Beneath added the ethical doctrine into utilitarianism that human action should direct to the greatest happiness 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 some more. The major problem with Bantams utility theory was that pleasure, a kind of sensation could not be quantify or measure.He tried to measure it apply 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 constraining 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 qu ality. (Anagram, 2012) His publication, Principles of Political Economy summarizes and f utilise all the economic knowledge up to his day.His discussed assorted bring ons from production to international 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 price takes into account not only the interior(prenominal) 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 undetectable hand in the market would eventually move the market to its equilibrium stage. However, Jeremy Beneath, 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 autocratic 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 t hat the international price of trade is resolute by the elasticity of demand of the product. Mills theory is important as it flog the economy. On the topic of value, Adam Smith placed 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 poesy 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 interpreted to obtain raw materials and capital goods which s used in the production process. In examining Thomas Malthusian ideas, the work of a very disputed man during his time, we could see that his works are favored by the laden 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 abutting 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(prenominal) than increment of population growth. Contributions of the Classical School in Contemporary It is necessary 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 indeed had made a huge wallop in transformation of economy from mercantilism to free market. The most of import idea that he leave for us would be the harmony of interest.The key behind the mechanism that brought all self-interest seeking conduct to become a social good, commonly also known as the invisible hand, is the concept of competition. It is because of competition that producers are restrained from making extra loot 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 disputable 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 th at 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 school of thoughts indeed is an essential period in the history of the economical behavior of the society.