Classical economics

Classical economics Classical economic theory is a school of thought that academics, including Adam Smith, David Ricardo and John Stuart Mill, established in the eighteenth and nineteenth centuries. Classical economic thinkers saw external forces, such as imposed tariffs or government directives, as a barrier to the productive potential of nations. Identifying these challenges, they proposed that market economies are optimal when they're self-regulating. They believed that without external interferences, businesses can produce goods according to consumers' needs, and consumers may purchase freely according to their preferences and income. Say's law is another deeply held belief in classical economics, claiming that production is key to generating economic growth, not demand. By focusing on production, businesses can generate the profits required to pay wages and make additional investments. The wealth generated from this allows employees and businesspeople to purchase goods, which stimulates demand and leads to further production. Classical thinkers addressed the idea of overproduction by suggesting that any surplus that businesses create can cause price reductions, which makes the product more affordable for consumers to purchase.
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