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A Report on the Thesis and Opinions in Adam Smith's The Wealth of Nations, Thomas Robert Malthus's An Essay on the Principle of Population, and David Ricardo's Principles of Political Economy and Taxation
Word Count: 730
Word Count: 730
As a coherent economic theory classical economics start with Smith continues with the British Economists Thomas Robert Malthus and David Ricardo Although differences of opinion were numerous among the classical economists in the time span between Smiths Wealth of Nations 1776 and Ricardos Principles of Political Economy and Taxation 1817 they all mainly agreed on major principles All believed in private property free markets and in Smiths words The individual pursuit of private gain to increase the public good They shared Smiths strong suspicion of government and his enthusiastic confidence in the power of self-interest represented by his famous invisible hand which reconciled public benefit with personal quest of private gain From Ricardo classicists derived the notion of diminishing returns which held that as more labor and capital were applied to land yields after a certain and not very advanced stage in the progress of agriculture steadily diminished The central thesis of The Wealth of Nations is that capital is best employed for the production and distribution of wealth under conditions of governmental noninterference or laissez-faire and free trade In Smiths view the production and exchange of goods can be stimulated and a consequent rise in the general standard of living attained only through the efficient operations of private industrial and commercial entrepreneurs acting with a minimum of regulation and control by the governments To explain this concept of government maintaining laissez-faire attitude toward the commercial endeavors Smith proclaimed the principle of the invisible hand Every individual in pursuing his or her own good is led as if by an invisible hand to achieve the best good for all Therefore any interference with free competition by government is almost certain to be injurious Although this view has undergone considerable modification by economists in the light of historical developments since Smiths time many sections of The Wealth of Nations notably those relating to the sources of income and the nature of capital
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