Classical political economy
What makes a nation wealthy, and how is its income split between landowners, workers and capitalists?
The 30-second version
The founders. Adam Smith and David Ricardo asked why some nations get rich. Their answer: specialise, trade, and let prices coordinate. Almost every later school either builds on them or argues with them. Comparative advantage, their best idea, still opens every trade course.
Big questions it works on
Go deeperKey ideas, thinkers, evidence and where it stands today
Key ideas
- Specialisation and the division of labour raise productivity (Smith's pin factory).
- Markets coordinate through prices. The famous “invisible hand” appears only once in The Wealth of Nations.
- Comparative advantage: countries gain from trade even if one is better at everything (Ricardo, 1817).
- Labour as the source of value; diminishing returns on land.
Key thinkers
Adam Smith (The Wealth of Nations, 1776), David Ricardo, Thomas Malthus, John Stuart Mill
What it got right
Main criticisms
Evidence worth knowing
Smith is often read as pure free-market. He also wrote The Theory of Moral Sentiments (1759) and warned that merchants meeting together tend to conspire against the public.
Where it stands today
The common ancestor of almost every school on this map. Studied as history of thought.
Family line
Built on the Physiocrats and mercantilist debates. Both Marx and the neoclassicals grew out of it.