Economics For Dummies, 4th Edition

Chapter 21

Ten (Or So) Super-Famous Economists

IN THIS CHAPTER

Realizing that no economist works in isolation

Singling out some amazing economists

This short chapter describes the ideas put forth by eleven of the best and most influential economists in world history. (Ten wasn’t enough.) Each either radically changed the way that economics conceptualizes the world or radically changed the way that politicians and government officials formulate public policy.

Adam Smith

Adam Smith (1723–1790) developed the intuition that as long as firms are constrained by robust competition, their self-interested profit seeking inadvertently causes them to act in ways that are socially optimal — as though they’re guided by an invisible hand to do the right thing.

But Smith wasn’t naive. He believed that businesspeople prefer to collude rather than compete whenever possible and that governments have an important economic role to play in fostering the robust competition needed for the invisible hand to work its magic. He also believed that governments must provide many essential public goods, like national defense, that the private sector don’t readily produce.

David Ricardo

David Ricardo (1772–1823) discovered comparative advantage and argued correctly that international trade is a win-win ...