Classical Economics Outline -- DRAFT -
CLASSICAL SCHOOL OF ECONOMICS
R. Larry Reynolds
The Classical School of economics was developed about 1750 and lasted as the mainstream of
economic thought until the late 1800’s. Adam Smith's
Wealth of Nations
, published in
1776 can be used as the formal beginning of Classical Economics but it actually it evolved
over a period of time and was influenced by Mercantilist doctrines, Physiocracy, the
enlightenment, classical liberalism and the early stages of the industrial revolution. Adam
is recognized as the originator of Classical Economics. John Stuart Mill
is often regarded as the synthesizer of the school.
Classical economics as the predominant school of mainstream economics ends with the
“Marginalist Revolution” and the rise of Neoclassical Economics in the late 1800’s. In the
1870's William Stanley Jevons' and Carl Menger's concept of marginal utility and Léon
Walras' general equilibrium theory provided the foundations. Henry Sidgwick, F.Y.
Edgeworth, Vilfredo Pareto and Alfred Marshall provided the tools for Neoclassical
economics. Neoclassical economics is an extension of Classical economics but, the focus of
the questions changed as well as the tools of analysis.
In spite of the dominance of
Neoclassical thought, Classical Economics has persisted and influences modern economics,
particularly the "New Classical Economics." The belief in the efficacy of a “free market” is
central to both classical and neoclassical ideology.
While Adam Smith would be regarded as the originator and leader of the school, David Ricardo
should be credited with establishing the form and methods of the school. The
debates between Thomas Malthus
and David Ricardo about policy issues such as
the "Corn Laws" and the "Poor Laws" contributed to the focus and form of the school.
Smith was concerned about the nature of economic growth. Malthus, Ricardo and other
classical economists were concerned about the question of “distribution.” One important
debate among classical economists was whether there was or wasn’t a “surplus” or “glut.”
Jean Baptiste Say
and Malthus were the two major protagonists in the question
about the existence of a surplus and its effects on a market economy.
Blaug, Mark. “Classical Economics,”
The New Palgrave Dictionary of Economics
, pp 434-
, Basil Blackwell, 1987.
The Making of Modern Economics
, M.E. Sharpe, 2001, pp 13-131.
Ekelund, Robert and Robert Hébert.
A History of Economic Theory and Method
Hill, 1997, pp 95-225.
Spiegel, Henry William.