Governments had taken steps to create a favorable atmosphere for business, such as Britain's laws to outlaw the export of inventions or the tariffs passed by the United States in 1789 to protect American industry, but played little role in the day-to-day operation of industry.
Like Smith, Thomas Malthus was a laissez-faire thinker whose writings influenced economic ideas for generations. In his 1798 book An Essay on the Principle of Population, he grimly predicted that poverty was unavoidable because the population was increasing faster than the food supply.
Malthus wrote: “The power of population is [far] greater than the power of the Earth to produce subsistence for man.” He thought that the only checks on population growth were nature's “natural” methods of war, disease, and famine. As long as population kept increasing, he went on, the poor would suffer. He thus urged families to have fewer children and discouraged charitable handouts and vaccinations.
During the early 1800s, with industrial workers living and working in harsh conditions, many people accepted Malthus's bleak view. His view was proved wrong, however. Although the population boom did continue, the food supply grew even faster.
As the century progressed, living conditions in the Western world slowly improved, and people eventually did begin to have fewer children. By the 1900s, population growth was no longer a problem in the West, but it did continue to afflict many nations elsewhere.
Another influential British laissez-faire economist, David Ricardo, dedicated himself to economic studies after reading Smith's The Wealth of Nations. Like Malthus, Ricardo claimed that the poor had too many children and had little chance to escape poverty. In his “Iron Law of Wages,” Ricardo noted that when wages were high, families had more children. But more children increased the supply of labor, which led to lower wages and higher unemployment. Because of such gloomy predictions, economics became known as the “dismal science.”
Neither Malthus nor Ricardo was a cruel man. Still, both opposed any government help for the poor. In their view, the best cure for poverty was not government relief but the unrestricted “laws of the free market.” They felt that individuals should be left to improve their lot through thrift, hard work, and limiting the size of their families.
Laissez-faire thinker Thomas Malthus believed that the increasing population put too great a strain on the food supply. He suggested smaller family sizes as a solution to ending poverty.
How did the ideas that Adam Smith discussed in The Wealth of Nations support the free enterprise system?
Other thinkers sought to modify laissez-faire doctrines to justify some government intervention. By 1800, British philosopher and economist Jeremy Bentham was advocating utilitarianism, or the idea that the goal of society should be “the greatest happiness for the greatest number” of its citizens. To Bentham, all laws or actions should be judged by their “utility.” In other words, did they provide more pleasure or happiness than pain? Bentham strongly supported individual freedom, which he believed guaranteed happiness. Still, he saw the need for government to become involved under certain circumstances.
Bentham's ideas influenced the British philosopher and economist John Stuart Mill. Although he believed strongly in individual freedom, Mill wanted the government to step in to improve the hard lives of the working class.