History of Economic Thought Ch 4 Classical Economic

History of Economic Thought Ch 4: Classical Economic Thought – Adam Smith 2/10/2018 Adam Smith (1723 - 1790) 1

Classical Economists Adam Smith (1723 – 1790) Thomas Malthus (1766 – 1834) David Ricardo (1772 – 1823) John Stuart Mill (1806 – 1873) 2/10/2018 Adam Smith (1723 - 1790) 2

Adam Smith (1723 – 1790) 2/10/2018 Adam Smith (1723 - 1790) 3

Background – Influenced by – Contributions – Impact - Critique u Adam Smith was a Scottish Philosopher and Economist. u Considered by many the father of economics. u At age 14 he enrolled at Glasgow University to study moral philosophy, and later studied moral and political science in Oxford. 2/10/2018 Adam Smith (1723 - 1790) 4

Background – Influenced by – Contributions – Impact - Critique u Adam Smith’s Contributions: – He helped to make Political Economy into an “autonomous systematic discipline” – The invisible hand, Division of labor. u Adam Smith has influenced many Economists – David Ricardo • • 2/10/2018 David Ricardo became interested in Economics after reading Wealth of Nations. All the other economists that followed. Adam Smith (1723 - 1790) 5

Background – Influenced by – Contributions – Impact - Critique u Adam Smith’s efforts arguing against Mercantilism paved way for Britain to engage in free trade. – Britain dropped some Mercantilist thought years after Wealth of Nations. u Adam Smith’s theories appear today in our microeconomic and macroeconomic text books – Some recognizable theories are: The Invisible Hand, Division of Labor, and the concept of Lassiez-faire. 2/10/2018 Adam Smith (1723 - 1790) 6

Background – Influenced by – Contributions – Impact - Critique u u Adam Smith did not believe in the usefulness of statistics in economics, an approach proposed by William Petty (1623 – 1687). His almost 1000 pages book, “The Wealth of Nations”, could have been much shorter and clearer had he used graphs and math. 2/10/2018 Adam Smith (1723 - 1790) 7