ABSTRACT
This chapter introduces the Classical view of the macroeconomy. It discusses the Classical economic defenses of Say's Law; and the Classical view of how the operation of supply and demand in the market for labor automatically tends to return to equilibrium with full employment after any disturbance. The chapter also discusses the Classical view of the flow of money and goods; and the Classical arguments against government intervention in the economy. Remember that Classical is defined to mean all of those economists from Adam Smith to the present who argue that capitalism does not cause recessions and that capitalist economies recover automatically when an outside shock causes a recession. Most Classical writing has been on the microeconomy and individual markets. These individual markets encompass everything from coats to cars and from haircuts to grass cutting. The Classical theory of behavior in individual markets provides the foundation for its theories about the behavior of all markets in the aggregate or macroeconomy.
