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.
