Smith's book The Wealth of Nations (1776) includes many ideas that economists still accept as the basis for private enterprise. Smith believed that free competition and free trade help an economy grow. He said the government's main role in economic life should be to assure effective competition. Smith and his followers became known as classical economists.

Three British economists of the late 1700's and the 1800's wrote particularly influential works. David Ricardo published strong arguments for free trade among nations. Thomas Robert Malthus challenged some of Smith's ideas but developed others further. Malthus warned that if populations continued to grow, nations someday would not be able to produce enough to feed all the people. John Stuart Mill proposed that profits be divided more equally among employers and workers.

Karl Marx and Communism. Some writers disagreed with the idea that competition would lead to economic progress. The most influential was Karl Marx, a German philosopher of the 1800's. In his book Das Kapital (Capital), Marx interpreted human history as a struggle between the ruling class and the working class. He declared that free enterprise would lead to increasingly severe depressions, and eventually to a revolution by the workers. In the Communist Manifesto, Marx and his friend Friedrich Engels called for an economy in which the government would own most of the property. Marx's theories provided the basis for the development of Communism.

New solutions for old problems. During the late 1800's and the early 1900's, economists began to use scientific methods to study economic problems. In France, Leon Walras worked out a mathematical