The Classical school is the school of economics founded by Adam Smith. Smith was primarily concerned with explaining the origins of wealth creation and with advocating the benefits of free trade. He achieved this by analysing the economic relationships between the classes: workers, who earn their living by wage labour; capitalists, who derive income from profits; and landlords, whose income derives from rent. Supply and demand in each class determined prices. David Ricardo extended this analysis, in particular elucidating the concept of value, which in the Classical school is seen as a product of labour. The labour theory of value was used by Karl Marx as a basis for his analysis of the capitalist economy and Marxists have remained firmly wedded to the Classical school. The Marginalists of the late 19th century overturned this thinking by defining value in relation to scarcity alone; this remains the basis of the neoclassical school. Research Classical School
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Matt and Leela Probert
Abbreviations
Money
Research Classical School
