He was the first public choice economist, lived from 1723-1790, and wrote The Wealth of Nations in 1776. The two main points for this book were that governments don't need to regulate economic affairs and that it's necessary to allow a system of free and peaceful associations.
Lassiez Faire:
the theory or system of government that upholds theautonomous character of the economic order, believing that government should intervene as little as possible in the direction of economic affairs
Governments need to provide:
- police and courts (protection from internal bandits)
- national defense (protection from foreign bandits)
- public works
If we pursue our own interests:
- private property rights need to be protected
- division of labor must exist
- exchange has to be peaceful and mutually agreed upon
- there can't be any special privileges for anyone
Smith stated that our source of wealth was our ability to produce and exchange goods that people value. He also argued that people have a moral obligation to seek out things other than just their own self-interests, and that we should be suspicious of anyone that claims to know what we want. Smith's other assertion was that market competition can be created anywhere it's feasible for it to exist. There are certain things that need to be precluded from entering the economic market.
- The market should be free.
- The people should be free.
- Price controls shouldn't exist, and entry to the market is open to everyone.
- Efforts should be restricted.
Spontaneous Order: essentially, the clusterfuck of human society will always figure itself out --> no one decided that we should have a capitalist society
Ferguson (1767) determined that nobody designs human social society, BUT not everything that comes about because of spontaneous order is good. He also stated that we truck, barter, and exchange to better ourselves because something between extinct and reason that tells us we want to make our lives better.
Corn (a.k.a grain) prices quadrupled post-Smith. To combat the rise in price, Jews began to bring in wheat from abroad. This caused the imposition of sliding duties on imported grains. The corn laws kept the price floor down for land owners in England. When these laws were eradicated, there were no more tariffs in Britain, which allowed for huge economic growth.
Short-run Inequality: the more capitalist a country is, the less important capital is
Long-run Inequality: the more capitalist a country is, the less amount of capital comes from property
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