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There are many ways that to govern a country. Obviously, officials run most countries, but what kind of system do they govern by? Some of the most important systems used today are capitalism, socialism, and communism.
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 Smith?s Wealth of Nations and Ricardo?s Principles of Political Economy and Taxation, they all mainly agreed on major principles. All believed in private property, free markets, and, in Smith?s words, ? The individual pursuit of private gain to increase the public good.? They shared Smith?s 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 Smith?s 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 Smith?s time, many sections of The Wealth of Nations notably those relating to the sources of income and the nature of capital, have continued to form the basis of modern American politics and economy. The Wealth of Nations has also served as a guide to the formulation of governmental economic policies.
Malthus, on the other hand, in his book An Essay on the Principle of Population conveyed a tone of dreariness. Malthus?s main contribution to economics was his theory that a population tends to increase faster than the supply of food available for its needs. This theory contradicted the belief prevailing in the early 19th century that a society?s fertility would lead to economic progress. Malthus?s theory was often used as an argument against efforts to better the condition of the poor. Food, he believed, would increase in arithmetic ratio (2-4-6-8-10), but population tended to double in each generation (2-4-8-16-32) unless that doubling was ruled out by ?natural selection?. According to Malthus? natures checks and balances were positive: ?The power of population is so superior to the power of the earth to produce subsistence for man, that premature death must in some shape or other visit the human race.? The forms it took included war, epidemics, pestilence and plague, human vices and famine, all combining to level the world?s population with the world?s food supply.
The only escape from over-population and the horrors of the so-called, ?positive check? was in voluntary limitation of population, not by contraception, rejected on religious grounds by Malthus, but by late marriage and, consequently smaller families. These pessimistic doctrines of classical economists earned for economics the nature of the ?dismal science?.
The writings of Malthus encouraged the first systematic demographic studies. They also influenced subsequent economists, particularly David Ricardo, whose ?iron law of wages? and the ?theory of distribution of wealth? contains some elements of Malthus?s theory. In his major work, Principles of Political Economy and Taxation, Ricardo offered several theories based on his studies of the long-range distribution of wealth. Ricardo feared increasing population would lead to a shortage of productive land. He supported the classical theory of international trade, emphasizing national specialization of freedom of competition.
Although representation of the classical economist has changed throughout time, its basis is still the center for most political guidelines. In everyday life we live, breathe, and work in conditions that have been set forth previously by all three, Smith, Malthus, and Ricardo It?s hard to imagine an economy, for that matter, a world without these natural ways of being and diversity.
Unlike its counter part modern socialism is, in its essence, the direct product of the recognition, on the one hand, of the class antagonisms existing in the society of today between proprietors and non-proprietors, between capitalists and wage-workers; on the other hand, of the anarchy existing in production. But, in its theoretical form, modern socialism originally appears ostensibly as a more logical extension of the principles laid down by the great Utopian Socialists of the 18th century. Like every new theory, modern Socialism had, at first, to connect itself with the ?intellectual stock-in-trade ready to its hand, however deeply its roots lay in material economic facts.?
One of the few born leaders of men, Robert Owen came up with the idea of a ?perfect? factory system. Owen had adopted the teaching of the materialistic philosophers: that man’s character is the product, on the one hand, of heredity; on the other, of the environment of the individual during his lifetime, and especially during his period of development. Owen believed that society?s ills could be solved by improving their living and working conditions.
During the industrial revolution most of Owen?s class was exposed only to chaos and confusion, and the opportunity of making large fortunes quickly. He saw in it the opportunity of putting into practice his favorite theory, and so of bringing order out of chaos. He had already tried it with success, as superintendent of more than 500 men in a Manchester factory. From 1800 to 1829, he directed the great cotton mill at New Lanark, in Scotland, as managing partner, along the same lines, but with greater freedom of action and with a success that made him a European reputation. A population, originally consisting of the most diverse and, for the most part, very demoralized elements, a population that gradually grew to 2,500, he turned into a model colony, in which drunkenness, police, magistrates, lawsuits, poor laws, charity, were unknown. And all this simply by placing the people in conditions worthy of human beings, and especially by carefully bringing up the rising generation. He was the founder of infant schools, and introduced them first at New Lanark. When a crisis in cotton stopped work for four months, his workers received their full wages all the time. And with all this the business more than doubled in value, and to the last yielded large profits to its proprietors. The people took advantage of these bettered conditions. Owen did not have restrictions, and as a result productivity began to decrease rapidly, and ultimately the factory lost money.
Saint-Simon was a son of the great French Revolution. Born a nobleman, he was precocious for his society?s day and age. He believed that technology was the key to the future, without service and technology society would not be able to flourish. Simone understood that industrialization was the key to higher living. Unlike his classical economic counterparts, Simone opposed the exploitation of nature, but especially of man.
Charles Fourier, was one of the few unique utopian socialists. He believed that man should only perform work that man enjoys engaging in, agreeable work. In Fourier we find a criticism of the existing conditions of society.
.He confronts the material and moral misery of the bourgeois world with the earlier philosophers’ promises of a society in which reason alone should reign, of a civilization in which happiness should be universal, of an endless human perfectibility, and the phraseology of the bourgeois ideologists of his time. He depicts, with equal power and charm, the shop-keeping spirit prevalent in, and characteristic of, French commerce at that time. The ideal harmonious state of his Brook Farm experiment, a phalanstery south of Boston attracted little attention.
He was the first to declare that in any given society the degree of woman’s emancipation is the natural measure of the general emancipation. He proves ?that the civilized stage raises every vice practiced by barbarism in a simple fashion into a form of existence, complex, ambiguous, equivocal, hypocritical” — that civilization moves “in a vicious circle”, in contradictions which it constantly reproduces without being able to solve them. This is how he constantly arrives at the very opposite to that which he wants to attain, or pretends to want to attain, “under civilization poverty is born of superabundance itself”.
The last of the French utopian socialists, by the name of Louis Blanqui believed in natural workshops and the idea of the government standing as an employment agency.
HET Pages: The Classical Ricardian System, the General Glut Controversy, Classical Growth, the Bullionist Controversy, Classical Theory of Money,
“Ricardo in Parliament”, by Edwin Cannan 1894, EJ
“The Development of Ricardo’s Theory of Value” by Jacob Hollander, 1904, QJE
“The Development of the Theory of Money From Adam Smith to David Ricardo” by Jacob Hollander, 1910, QJE
The British Economists by John Shield Nicholson, 1907.
“The Progress of Political Economy: Review of Ricardo and de Quincey”, 1848, Southern Quarterly Review
“David Ricardo” by G. de Vivo from New Palgrave, 1987, at Univ. Marburge (PDF Version)
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