John E. Schwartz, in the context of a review in the November/December 2010 issue of The Washington Monthly, makes the interesting point that the most famous free-market philosophers tended to hold more moderate views than today’s conservatives who like to quote them.
John Locke, noted for his defense of property rights, opposed allowing the accumulation of so much property as to effectively deny others the right to earn their own. Adam Smith famously championed the free market but also recognized that it was not flawless and advocated fairness to workers: “It is but equity that they who feed, cloath, and lodge the whole body of the people, should have such a share of thee produce of their labour as to be themselves tolerably well fed, cloathed, and lodged.”
Schwartz suggests that Smith would not approve of distribution of income in the U.S. in 2010, when more than a fourth of all employed Americans made under $11 an hour, a common estimate of the amount a typical full-time worker needed in order to be “tolerably well fed, cloathed, and lodged.” And we’re not talking about just teens in part-time jobs; the majority of these poorly paid workers were 25 to 64 years old, many with at least some education beyond high school. (This is not just a consequence of the bad economy in 2010. The fraction of workers paid less than a living wage had not fallen below 20 percent in two decades.)
Also, inflation-adjusted median income (the amount received by the person in the middle if you line up everyone in order by how much they make) had risen only about 10 percent since 1973, despite the fact that worker productivity (that is, the value of the goods and services produced per worker hour) has gone up by 80 percent.
Meanwhile, over the same time frame the income of the top 1 percent grew 18 times as fast as the median, a massive redistribution of money from the middle class to the very rich at the same time that the tax burden was shifted from the very rich to the upper middle class.
(Updated 2015 November 8 in an attempt to improve clarity.)