Editing Classical liberalism (section)

=== Adam Smith ===

[[Adam Smith]]'s ''[[The Wealth of Nations]]'', published in 1776, was to provide most of the ideas of economics, at least until the publication of [[John Stuart Mill]]'s ''[[Principles of Political Economy]]'' in 1848.{{sfn|Mills|pp=63, 68}} Smith addressed the motivation for economic activity, the causes of prices and the distribution of wealth and the policies the state should follow to maximise wealth.{{sfn|Mills|p=64}}

Smith wrote that as long as supply, demand, prices and competition were left free of government regulation, the pursuit of material self-interest, rather than altruism, would maximise the wealth of a society<ref name = smith/> through profit-driven production of goods and services. An "[[invisible hand]]" directed individuals and firms to work toward the public good as an unintended consequence of efforts to maximise their own gain. This provided a moral justification for the accumulation of wealth, which had previously been viewed by some as sinful.{{sfn|Mills|p=64}}

He assumed that workers could be paid wages as low as was necessary for their survival, which was later transformed by [[David Ricardo]] and [[Thomas Robert Malthus]] into the "[[iron law of wages]]".{{sfn|Mills|p=65}} His main emphasis was on the benefit of free internal and international trade, which he thought could increase wealth through specialisation in production.{{sfn|Mills|p=66}} He also opposed restrictive trade preferences, state grants of monopolies and employers' organisations and trade unions.{{sfn|Mills|p=67}} Government should be limited to defence, public works and the administration of justice, financed by taxes based on income.{{sfn|Mills|p=68}}

Smith's economics was carried into practice in the nineteenth century with the lowering of tariffs in the 1820s, the repeal of the [[Poor Relief Act 1662|Poor Relief Act]] that had restricted the mobility of labour in 1834 and the end of the rule of the [[East India Company]] over India in 1858.{{sfn|Mills|p=69}}
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