14 Facts About Classical economics

Classical economics, classical political economy, or Smithian economics is a school of thought in political economy that flourished, primarily in Britain, in the late 18th and early-to-mid 19th century.

Classical economics warned repeatedly of the dangers of monopoly, and stressed the importance of competition.

Classical economics economists produced their "magnificent dynamics" during a period in which capitalism was emerging from feudalism and in which the Industrial Revolution was leading to vast changes in society.

The definitive split is typically placed somewhere in the 1870s, after which the torch of Ricardian economics was carried mainly by Marxian economics, while neoclassical economics became the new orthodoxy in the English-speaking world.

The economist Mason Gaffney documented original sources that appear to confirm his thesis arguing that neoclassical economics arose as a concerted effort to suppress the ideas of classical economics and those of Henry George in particular.

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Classical economics argued against mercantilism, and instead favored free trade and free markets, while believing that this would favor the countries who participate in free trade.

Classical economics elucidated that mercantilist policies would benefit domestic producers but not the country because it prevents consumers buying products at competitive prices, therefore directing cashflow ineffectively.

Classical economics argued that international trade, in any case, would increase the standard of living.

Classical economics economists developed a theory of value, or price, to investigate economic dynamics.

Classical economics stated that natural prices were the sum of natural rates of wages, profits and rent.

Classical economics criticized Smith for describing rent as price-determining, instead of price-determined, and saw the labour theory of value as a good approximation.

The Classical economics economists took the theory of the determinants of the level and growth of population as part of Political Economy.

One issue is whether classical economics is a forerunner of neoclassical economics or a school of thought that had a distinct theory of value, distribution, and growth.

Sraffians, who emphasize the discontinuity thesis, see classical economics as extending from Petty's work in the 17th century to the break-up of the Ricardian system around 1830.