SummaryThis is the first important school of economic thought, which included some of the best known economists of all times. Thanks to these authors, the study of economics became more of a science, instead of just a kind of philosophy. It took place from the late 18th century to the late 19th century.
John S. Mill was an English economist, (1806-1873), son of the also economist James Mill, who gave him a rigorous education. His “Principles of Political Economy”, which is considered one of the most important contributions made by the Classical school of economics, did not think of prices from a Theory of value perspective, but as a result of the intersection of supply and demand, with references to international trade concepts, such as reciprocal demand and the terms of international exchange, or as we know the term nowadays, terms of trade. In fact, it was Mill’s work on “International values” which made possible further graphical analysis by Francis Y. Edgeworth. Individualistic in the first part of his life, showed in the second a certain proclivity for socialist ideas without ever losing its high appreciation of freedom and even religious values.
He also made contributions to the quantity theory, by developing David Hume‘s work on the subject. In his book “Principles of Political Economy”, he explained the difference between money and price, often used for the same idea by other classical economists, and made clear the relation between money quantity and prices. However, it was Irving Fisher who finally stated the equation of exchange.