The Classical Economists on Laissez-faire

On Classical Economics

The classical economists can hardly be considered conservative in terms of favorable predisposition toward existing institutions or the dominant social classes. Adam Smith’s attacks on both were sweeping, and the Ricardians were active in attacking not only economic anachronisms (the Corn Laws, prohibitions against trade unions, and other mercantilistic regulations) but were also active – as Benthamites – in attacks on political relics and abuses.

The rise of more radical critics, schools, and movements with the development of industrial capitalism made the classical economists seem more conservative. Moreover, the rallying cry, laissez-faire! was, in the new context, no longer simply an attack on institutional favoritism to the upper classes. It was now usable as a defense of new vested interest who were imposing important external costs on society by unsanitary working and living conditions, child labor, pollutions, etc. The classical economists themselves were no inclined to use their doctrines in this way, and in fact favored some legislation aimed at the abuses of industrialism and urbanism. However, they were constrained to some extent by their general tradition of laissez-faire as well as by the implications of their economic theories. The Malthusian population theory made all kinds of income-transfer policies appear futile as a means of helping the poor, and raised the specter of all of society being dragged down to the poverty level if they attempted directly to raise the poor above it. Say’s Law, together with the comparative statics, long-run equilibrium analysis of the Ricardians, made unemployment a transitory phenomenon growing out of passing maladjustments and government interferences. Theories of aggregate disequilibrium and wage inflexibilities were both rejected by the Ricardians.

References:

1. Sowell, Thomas. On Classical Economics. New Haven: Yale UP, 2006. Print. 19-20.

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