“The real tragedy of the poor is the poverty of their aspirations.”

CLASSICAL ECONOMICS By: Brianna Snyder

Classical Economics Overview Were influenced by Wealth of Nations written by Adam Smith Ideas aligned with the laissez-faire policy Thought government should only perform important functions Maintain a currency, enforce contracts, protect property, etc. Favored economic growth through competitive free enterprise The beliefs of the economists mostly appealed to the middle classes

Malthus on Population One of the most influential writers Argued that nothing could improve the condition of the working class Published the first edition of Essay on the Principle of Population in 1798 Argued that population would eventually exceed the food supply The human population grows geometrically, but the food supply only grows arithmetically Argued the only ways to prevent this disaster was through reducing the population growth through late marriage, chastity, etc. Estimated that the situation of the working class would only worsen If their wages were raised, these workers would have more children, which would then consume the extra wages and food

Ricardo on Wages Published Principles of Political Economy in 1817 Transformed Malthus’s ideas into the “iron law of wages” If wages were raised, parents would have more children Their children would then enter the labor market > more workers and lower wages When the wages were lowered, the working class would then produce fewer children Because of the few amount of children entering the labor market, wages would then rise > never ending cycle This argument backed employers’ decision to not raise wages and supported the opposition of labor unions

Government Policies Based on Classical Economics France Leaders of the July Monarchy told the French to be self-sufficient and enrich themselves The July Monarchy witnessed the construction of major capital-intensive projects such as roads, canals, and railways Germany In 1834, all of the major German states, with the exception of Austria, formed the Zollverein, or free trading union German economists argued for this approach to economic growth

Government Policies Based on Classical Economics Cont. Britain Jeremy Bentham Utilitarianism the greatest happiness for the greatest number Published Fragment on Government and The Principles of Morals and Legislation Argued that the application of reason and utility would remove the legal clutter that prevented justice from being realized

Poor Laws Followers of Jeremy Bentham passed the Poor Laws via the House of Commons Government set out to make poverty the most undesirable of all social situations Established workhouses which were seen as more unpleasant than life outside Acted as an incentive to motivate poverty-stricken citizens to seek steady employment

The Repeal of the Corn Laws Organized by manufacturers, the Anti-Corn Law League, sought to repeal the Corn Laws for more than 6 years This repeal would abolish the tariffs protecting the domestic price of grain This repeal was influenced by the Irish famine This repeal was the zenith of the lowering of British tariffs that had begun during the 1820s Marked the opening of an era of free trade that would continue until the twentieth century