Classical Economics

Classical economics is the school of economic thought that runs from the work of Adam Smith in the late eighteenth century through the economists who followed him, including David Ricardo, Thomas Malthus and John Stuart Mill, into the middle decades of the nineteenth century. Classical economists analyzed how competitive markets coordinate the self interested decisions of individual buyers and sellers into a broadly beneficial social order without central direction, and they generally explained the value of goods by reference to the labor and other costs required to produce them. The school also developed early accounts of free trade, comparative advantage and the long run tendency of an economy toward a stationary or steadily growing state. Classical economics gave way to the marginalist or neoclassical economics that followed the marginal revolution of the early 1870s, when economists including William Stanley Jevons, Carl Menger and Leon Walras reworked value theory around subjective marginal utility rather than cost of production, though historians of economic thought continue to debate exactly where the classical period should be said to end.