Adam Smith
Adam Smith is known as the father of modern economics. Born in Scotland in 1723, he embarked on an academic career at the age of 15. Educated primarily in European literature, he was awarded a position as chair of logic in 1751 and then chair of moral philosophy the following year at Glasgow University.
In 1764, Smith became the tutor of the young Duke of Buccleuch. This career change had lasting effects on Smith's philosophy. While he traveled with the Duke, he visited places like Switzerland and France and became aware of the ideas of thinkers such as Voltaire, Rousseau, Quesnay, and Turgot.
Importantly, his employment with the Duke gave him a life-long pension. This granted him the freedom to retire and write his work Theory of Moral Sentiments, which was published in 1759. He continued to write afterwards and produced The Wealth of Nations in 1776. The philosophy he advocated in these works continues to influence economic thought today.
According to Smith, people have a capacity for reasonable judgment that is often underestimated and should not allow politicians or philosophers to impose unreasonable government regulations on them. He was an advocate of laissez-faire thinking, which was a policy of minimal government intervention in the economy. According to Smith, free markets allowed the natural laws of supply and demand to function properly. Smith remained a life-long bachelor and died in Scotland in 1790.
David Ricardo
Another influential economist was David Ricardo. Born in London on April 18, 1772, he was the third of 17 children. At the age of 14, he began working with his father, who was a successful stock broker. Ricardo worked with his father until 1793. During that year, Ricardo married Priscilla Anne Wilkinson, a Quaker. Later, he converted from Judaism to Christianity, a move that greatly angered his parents. This forced Ricardo to leave his father's business and start his own.
As a broker, he was able to save money to retire at the age of 42. With his first career over, he looked to politics for his next challenge. Ricardo read Adam Smith's book Wealth of Nations in 1799. He was so intrigued by the concepts in Smith's work that he began studying economics himself. In 1810, he produced his first publication, The High Price of Bullion, a Proof of the Depreciation of Bank Notes, which argued for the use of metallic currency.
His methods of analyzing market forces by using deduction and mathematics still influence economics today. He also believed, like Smith, that economies functioned best when they were left alone by governments. Ricardo was an early advocate of free trade.
One of his most influential theories was comparative advantage, which was the idea that nations should focus on industries where they could easily compete in the market and only trade with other countries to gain products not available nationally. By this theory, each nation could profit from specializing in certain industries. Ricardo died in 1823 at the age of 51.
Thomas Malthus
Reverend Thomas Malthus was born on February 13, 1766 in England. He has had an enduring effect on economics and even the work of Charles Darwin. In his autobiography, Darwin cited Malthus' Essay on the Principle of Population as inspiration for his theory of natural selection. In this work, Malthus wrote that, man, if left unchecked, was capable of producing far more offspring than the world resources could handle.
His conclusion was that if offspring were not regulated, eventually famine would become a global problem. Using these ideas, Darwin came to the conclusion that offspring with certain qualities would be better equipped to survive than others. In 1876 Darwin wrote:
'In October 1838, that is, fifteen months after I had begun my systematic inquiry, I happened to read for amusement Malthus on Population, and being well prepared to appreciate the struggle for existence which everywhere goes on from long- continued observation of the habits of animals and plants, it at once struck me that under these circumstances favorable variations would tend to be preserved, and unfavorable ones to be destroyed.'
Malthus continued to influence economics with his theory of wages, which stated that earnings would drop to the minimum amount necessary to maintain a worker's basic needs because high wages would cause a spike in population. His premise that population growth would cause worldwide starvation became known as the 'Malthusian catastrophe.' His views became controversial because they opposed the popular 18th century attitude that European society could improve and move towards perfection.
His population fears were based on the technology of his day. However, increases in food production, changes in storage, and industrial technology all helped to support a growing world population without the mass famine predicted by Malthus. He died on December 23rd, 1834.
Lesson Summary
As economists writing in the 18th and 19th centuries, Adam Smith, David Ricardo, and Thomas Malthus wrote about theories which would continue to influence economic theory in modern times.
Among the ideas advocated by Adam Smith was a policy of minimal government intervention in economic matters, or laissez-faire thinking. Smith was also a staunch supporter of free markets, which allowed the natural laws of supply and demand to function properly.
Smith became an influence for David Ricardo, who read his work Wealth of Nations before embarking on his own economic studies. Ricardo was also a proponent of laissez-faire economics. One of his most enduring legacies was his support of utilizing metallic money to replace paper bank notes.
Thomas Malthus was most noted for his assertion that the world's population needed to be regulated. He believed that since the world contained limited resources, continued population growth would ultimately lead to global starvation. While this theory has been seen as unfounded, his focus on population studies helped pave the way for modern studies.
In their own ways, these economists paved the way for modern studies of free markets, population, government regulations, and currency.
