Political Economy of Development

Classical political economy is also referred to as Classical economics.
It is a school of thought in economics.
Emerged primarily in Britain, in the late 18th and early-to-mid 19th century.
Mainly propagated by Adam Smith, David Ricardo, Jean-Baptiste Say, Thomas Robert Malthus, and John Stuart Mill.
Based on a theory of market economies developed by these thinkers, the “greats” of economic theory.
Main arguments: largely self-regulating systems, governed by natural laws of production and exchange, e.g., the invisible hand.
The beginning of classical economics is attributed to Adam Smith’s The Wealth of Nations (1776), which stated that the wealth of any nation was determined not by the gold in the monarch's coffers but by its national income.
This income was based on the labor of its inhabitants, organized efficiently by the division of labor and the use of accumulated capital, which became one of classical economics' central concepts.
The classical economists believed in free trade, unlike the mercantilists, but acknowledged an exceptional role for the state.
Smith noted the possibility of monopolies in markets if they were left alone.
Classical political economy is popularly associated with the promotion of free trade.

Classical political economy departs from its predecessors, the physiocrats, in that while the latter viewed income as the king’s treasury, Adam Smith viewed income as national income that has to be shared among laborers, landlords, and capitalists in the form of wages, rents, and interests.
This income for Adam Smith originates from labor, land, and capital, with property rights to land and capital held by individuals.
Major strides of classical economics were achieved during the transition from feudalism to capitalism and during the industrial revolution.
Smith’s theory was systematized by Ricardo and James Mill and became economic orthodoxy in 1815–1848.
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