Adam Smith, born in 1723, is considered one of the earlier writers on classical economic theory. The basis of his works would shape capitalist economies throughout the world, specifically through his promotion of laissez-faire economics.
Smith's most famous work is probably "The Wealth of Nations", detailing the economic foundation of European industrial growth. His economic theory included a minimization of government intervention in the market and the "invisible hand" idea, that supply and demand should not be subject to regulation.
Smith also argued that a free market, where people looked out for their own interests, would benefit consumers, intermediaries, and producers by linking the monetary desires of producers to their ability to meet the demands of consumers.
Mill
John Stuart Mill's seminal work was "Principles of Political Economy", published in 1848.
Mill was not entirely for a laissez-faire system, believing in freedoms of contract and property, as well as a certain measure of economic regulation like protection of working hours.
He developed the concept of opportunity cost, or the cost of doing one action over another where the two are mutually exclusive, and expanded on David Ricardo's concept of comparative advantage, which relates to production value compared to other rates of production instead of an absolute production ability.
Overall, Mill was for a free market, but with certain caveats if they would create more benefits. An example would be his advocacy for an inheritance tax, based on his belief that wealth should not entirely be predetermined from birth.
Marx
Recessions, particularly the Great Depression, turned the public eye more toward socialist ideals. Marx, one of the forefathers of socialism, had his own ideas about economics that influenced American politics, particularly during Roosevelt's presidency from Long, Coughlin, and Townsend, who called for socialist-based wealth distribution.
Marx argued in "Capital" about the labor theory of value: that the value of something can be measured by the amount of time taken to produce it. Using this concept, Marx believed that workers should be compensated for the hours they spend, proportionately. Marx argued that, since capitalists profited from workers, they would need to steal a portion of the compensation that the labor deserved in order to turn a profit. However, most modern economists disagree with Marx's labor theory.
Marx also wove his economic theory into his general work about socialism, arguing that an uncontrolled market has all the power over individual workers, instead of workers having control over their destinies.
Keynes
John Maynard Keynes wrote in the early 20th century, publishing "The Economic Consequences of the Peace" in 1919. In this book, Keynes connected the unstable economy of Germany due to war reparations to eventual instability, foreseeing the political climate that would lead up to World War 2.
Keynes' "General Theory of Employment, Interest and Money" discussed government investment and its relationship, which he thought was essential, to creating employment. Specifically, Keynes wrote about deficit spending while the economy was in recession to create employment, which is very similar to Roosevelt's New Deal Policies, where organization such as the Civilian Conservation Corps created government jobs for hundreds of thousands.
Keynes believed in a free market if full employment standards were first met through government control.
Mr. Stewart, please forgive me if I make terrible mistakes about microecon.
Sources:
Lisa Smith, 1-29-2015, "Adam Smith: The Father Of Economics," Investopedia, http://www.investopedia.com/articles/economics/08/adam-smith-economics.asp
Encyclopedia Britannica, "laissez-faire," http://www.britannica.com/topic/laissez-faire
"John Stuart Mill: The Concise Encyclopedia of Economics," Library of Economics and Liberty, http://www.econlib.org/library/Enc/bios/Mill.html
Kennedy, David M. Freedom from Fear: The American People in Depression and War, 1929-1945. , 1999. Print.
David L. Prychitko, "Marxism: The Concise Encyclopedia of Economics," Library of Economics and Liberty, http://www.econlib.org/library/Enc/Marxism.html
"John Maynard Keynes: The Concise Encyclopedia of Economics," Library of Economics and Liberty, http://www.econlib.org/library/Enc/bios/Keynes.html
How did the ideas of all these economists interact with others? They obviously disagreed in a lot of areas, especially on the amount of government regulation, and different ideas held different amounts of influence at different times. Did Keynes write as middle ground between Smith and Marx, or did he reach his economic conclusions independently?
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