Until then, the dominant economic school, Mercantilism, taught that poverty was necessary. It was considered the only way to incentivize people to work hard, and it was thought that only low wages could reduce the cost of production so that a country could remain competitive. If the poor got a raise, they would leave the job and end up in the alehouse, according to many thinkers of the time. The Scottish economist Adam Smith, the arch-enemy of the Mercantilists, thought that this was wrong, arguing that higher wages could in fact make people work more and that ‘no society can surely be
...more