Editing Classical liberalism (section)

=== Classical economics ===
In addition to Smith's legacy, [[Say's law]], [[Thomas Robert Malthus]]' theories of population and [[David Ricardo]]'s [[iron law of wages]] became central doctrines of [[classical economics]]. The pessimistic nature of these theories provided a basis for criticism of capitalism by its opponents and helped perpetuate the tradition of calling economics the "[[dismal science]]".{{sfn|Mills|p=76}}

[[Jean-Baptiste Say]] was a French economist who introduced Smith's economic theories into France and whose commentaries on Smith were read in both France and Britain.{{sfn|Mills|p=69}} Say challenged Smith's [[labour theory of value]], believing that prices were determined by utility and also emphasised the critical role of the entrepreneur in the economy. However, neither of those observations became accepted by British economists at the time. His most important contribution to economic thinking was Say's law, which was interpreted by classical economists that there could be no [[overproduction]] in a market and that there would always be a balance between supply and demand.{{sfn|Mills|p=70}}<ref>{{cite journal|first1=Mark|last1=Blaug|title=Say's Law of Markets: What Did It Mean and Why Should We Care?|url=https://www.jstor.org/stable/40325773|journal=Eastern Economic Journal|date=1997|issn=0094-5056|pages=231–235|volume=23|issue=2|jstor=40325773}}</ref> This general belief influenced government policies until the 1930s. Following this law, since the economic cycle was seen as self-correcting, government did not intervene during periods of economic hardship because it was seen as futile.{{sfn|Mills|p=71}}

Malthus wrote two books, ''[[An Essay on the Principle of Population]]'' (published in 1798) and ''[[Principles of Political Economy (Malthus)|Principles of Political Economy]]'' (published in 1820). The second book which was a rebuttal of Say's law had little influence on contemporary economists.{{sfn|Mills|pp=71–72}} However, his first book became a major influence on classical liberalism.<ref>{{cite book|first1=Ashleigh|last1=Campi|first2=Lindsay|last2=Scorgie-Porter|title=An Analysis of John Stuart Mill's On Liberty|url=https://books.google.com/books?id=qjQuDwAAQBAJ|publisher=CRC Press|year= 2017|isbn=978-1351352581|via=Google Books}}</ref>{{sfn|Mills|p=72}} In that book, Malthus claimed that population growth would outstrip food production because population grew geometrically while food production grew arithmetically. As people were provided with food, they would reproduce until their growth outstripped the food supply. Nature would then provide a check to growth in the forms of vice and misery. No gains in income could prevent this and any welfare for the poor would be self-defeating. The poor were in fact responsible for their own problems which could have been avoided through self-restraint.{{sfn|Mills|p=72}}

Ricardo, who was an admirer of Smith, covered many of the same topics, but while Smith drew conclusions from broadly empirical observations he used deduction, drawing conclusions by reasoning from basic assumptions.{{sfn|Mills|pp=73–74}} While Ricardo accepted Smith's [[labour theory of value]], he acknowledged that utility could influence the price of some rare items. Rents on agricultural land were seen as the production that was surplus to the subsistence required by the tenants. Wages were seen as the amount required for workers' subsistence and to maintain current population levels.{{sfn|Mills|pp=74–75}} According to his iron law of wages, wages could never rise beyond subsistence levels. Ricardo explained profits as a return on capital, which itself was the product of labour, but a conclusion many drew from his theory was that profit was a surplus appropriated by [[Capitalism|capitalists]] to which they were not entitled.{{sfn|Mills|p=75}}