David Ricardo

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"For price is everywhere regulated by the return obtained by this last portion of capital, for which no rent whatever is paid."
- David Ricardo, 1821

David Ricardo (19 April 177211 September 1823) was an English political economist, often credited with systematizing economics, and was one of the most influential of the classical economists. He was also a member of Parliament, businessman, financier and speculator.

Quotes[edit]

  • Money is neither a material to work upon nor a tool to work with.
    • The High Price of Bullion (1810) [1]
  • Sufficiently rich to satisfy all my desires and the reasonable desires of all those about me.

The Principles of Political Economy and Taxation (1821) (Third Edition)[edit]

  • The produce of the earth - all that is derived from its surface by the united application of labour, machinery, and capital, is divided among three classes of the community, namely, the proprietor of the land, the owner of the stock or capital necessary for its cultivation, and the labourers by whose industry it is cultivated.
    • Original Preface, p. 1
  • Adam Smith, and other able writers to whom I have alluded, not having viewed correctly the principles of rent, have, it appears to me, overlooked many important truths, which can only be discovered after the subject of rent is thoroughly understood.
    • Original Preface, p. 1
  • I have endeavoured to show that the ability to pay taxes depends, not on the gross money value of the mass of commodities, nor on the net money value of the revenue of capitalists and landlords, but on the money value of each man's revenue compared to the money value of the commodities which he usually consumes.
    • Advertisement To The Third Edition, p. 3
  • Utility then is not the measure of exchangeable value, although it is absolutely essential to it.
    • Chapter I, Section I, On Value, p. 5
  • Possessing utility, commodities derive their exchangeable value from two sources: from their scarcity, and from the quantity of labour required to obtain them.
    • Chapter I, Section I, On Value, p. 5
  • If I have to hire a labourer for a week, and instead of ten shillings I pay him eight, no variation having taken place in the value of money, the labourer can probably obtain more food and necessaries with his eight shillings than he before obtained for ten: but this is owing, not to a rise in the real value of his wages,as stated by Adam Smith, and more recently by Mr. Malthus, but to a fall in the value of the things on which his wages are expended, things perfectly distinct; and yet for calling this a fall in the real value of wages, I am told that I adopt new and unusual language, not reconcilable with the true principals of the science. To me it appears that the unusual and, indeed, inconsistent language is that used by my opponents.
    • Chapter I, Section I, On Value, p. 11
  • The wheat bought by a farmer to sow is comparatively a fixed capital to the wheat purchased by a baker to make into loaves.
    • Chapter I, Section IV, On Value, p. 19
  • Neither machines, nor the commodities made by them, rise in real value, but all commodities made by machines fall, and fall in proportion to their durability.
    • Chapter I, Section V, On Value, p. 26
  • The variation in the value of money, however great, makes no difference in the rate of profits;...
    • Chapter I, On Value, p. 32
  • Rent is that portion of the produce of the earth which is paid to the landlord for the use of the original and indestructible powers of the soil.
    • Chapter II, On Rent, p. 33
  • Population regulates itself by the funds which are to employ it, and therefore always increases or diminishes with the increase or the diminution of capital. Every reduction of capital is therefore necessarily followed by a less effective demand for corn, by a fall in price, and by diminished cultivation.
    • Chapter II, On Rent, p. 41
  • If I discover a manure which will enable me to make a piece of land produce 20 per cent more corn, I may withdraw at least a portion of my capital from the most unproductive part of my farm.
    • Chapter II, On Rent, p. 43
  • It has therefore been justly observed that however honestly the coin of a country may conform to its standard, money made of gold and silver is still liable to fluctuations in value, not only to accidental, and temporary, but to permanent and natural variations, in the same manner as other commodities.
    • Chapter III, On the Rent of Mines, p. 47
  • LABOUR, like all other things which are purchased and sold, and which may be increased or diminished in quantity, has its natural and its market price. The natural price of labour is that price which is necessary to enable the labourers, on with another, to subsist and to perpetuate their race, without either increase or diminution.
    • Chapter V, On Wages, p. 52
  • The farmer and manufacturer can no more live without profit than the labourer without wages.
    • Chapter VI, On Profits, p. 73
  • No extension of foreign trade will immediately increase the amount of value in a country, although it will very powerfully contribute to increase the mass of commodities and therefore the sum of enjoyments.
    • Chapter VII, On Foreign Trade, p. 77
  • Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each. This pursuit of individual advantage is admirably connected with the with the universal good of the whole. By stimulating industry, by rewarding ingenuity, and by using most efficaciously the peculiar powers bestowed by nature, it distributes labour most effectively and most economically: while, by increasing the general mass of productions, it diffuses general benefit, and binds together, by one common tie of interest and intercourse, the universal society of nations throughout the civilized world.
    • Chapter VII, On Foreign Trade, p. 81 (See also.. Karl Marx, Das Kapital,(Buch II), Chapter XX, p. 474)
  • Every transaction in commerce is an independent transaction.
    • Chapter VII, On Foreign Trade, p. 85
  • Whenever the current of money is forcibly stopped, and when money is prevented from settling at its just level, there are no limits to the possible variations of the exchange.
    • Chapter VII, On Foreign Trade, p. 91
  • If English money was of the same value then as before, Hamburgh money must have risen in value. But where is the proof of this?
    • Chapter VII, On Foreign Trade, p. 93
  • There can be no greater error then in supposing that capital is increased by non-consumption.
    • Chapter VIII, On Taxes, Foot note 1, p. 94
  • The demand for money is regulated entirely by its value, and its value by its quantity.
    • Chapter XIII, Taxes on Gold, p. 123
  • But it is clear that the price of labour has no necessary connection with the price of food, since it depends entirely on the supply of labourers compared with the demand.
    • Chapter XVI, Taxes on Wages, p. 141
  • But a tax on luxuries would no other effect than to raise their price. It would fall wholly on the consumer, and could neither increase wages nor lower profits.
    • Chapter XVII, Taxes on Other Commodities, p. 161 (see also.. Consumption Tax)
  • If a tax on malt would raise the price of beer, a tax on bread must raise the price of bread.
    • Chapter XVII, Taxes on Other Commodities, p. 168
  • A BOUNTY on the exportation of corn tends to lower its price to the foreign consumer, but it has no permanent effect on its price in the home market.
    • Chapter XXII, Bounties and Prohibitions, p. 201
  • " for price is everywhere regulated by the return obtained by this last portion of capital, for which no rent whatever is paid.
    • Chapter XXIV, The Rent of Land, p. 220
  • Whether a bank lent one million, ten million, or a hundred millions, they would not permanently alter the market rate of interest; they would alter only the value of the money they issued.
    • Chapter XXVII, Currency and Banks, p. 246
  • The opinions that the price of commodities depends solely on the proportion of supply and demand, or demand to supply, has become almost an axiom in political economy, and has been the source of much error in that science.
    • Chapter XXX, Influence of Demand and Supply, p. 260
  • I have already expressed my opinion on this subject in treating of rent, and have now only further to add, that rent is a creation of value, as I understand that word, but not a creation of wealth.
    • Chapter XXXII, Malthus on Rent, p. 273
  • The price of corn will naturally rise with the difficulty of producing the last portions of it,...
    • Chapter XXXII, Malthus on Rent, p. 276
  • It has been my endeavour to show in this work that a fall of wages would have no other effect than to raise profits.
    • Chapter XXXII, Malthus on Rent, p. 281
  • To alter the money value of commodities, by altering the value of money, and yet to raise the same money amount by taxes, is then undoubtedly to increase the burthens of society.
    • Chapter XXXII, Malthus on Rent, p. 288
  • Mr. Malthus says, " It has been justly observed by Adam Smith that no equal quantity of productive labour employed in manufactures can ever occasion so great a reproduction as in agriculture. " If Adam Smith speaks of value, he is correct; but if he speaks of riches, which is the important point, he is mistaken; for he has himself defined riches to consist of the necessaries, conveniences, and enjoyments of human life. One set of necessaries and conveniences admits of no comparison with another set; value in use cannot be measured by any known standard; it is differently estimated by different persons.
    • Chapter XXXII, Malthus on Rent, p. 292

Quotes about David Ricardo[edit]

  • Ricardo’s theory is absolutely right—within its narrow confines. His theory correctly says that, accepting their current levels of technology as given, it is better for countries to specialize in things that they are relatively better at. One cannot argue with that.
    His theory fails when a country wants to acquire more advanced technologies so that it can do more difficult things that few others can do—that is, when it wants to develop its economy. It takes time and experience to absorb new technologies, so technologically backward producers need a period of protection from international competition during this period of learning. Such protection is costly, because the country is giving up the chance to import better and cheaper products. However, it is a price that has to be paid if it wants to develop advanced industries. Ricardo’s theory is, thus seen, for those who accept the status quo but not for those who want to change it.
  • The factors left out of the Ricardian equation are falling wages and idle capacity.
  • Marx's economic teachings are essentially a garbled rehash of the theories of Adam Smith and, first of all, of Ricardo.
    • Ludwig von Mises (1957), Theory and History: An Interpretation of Social and Economic Evolution
  • Ricardo himself was too conscientious. He hated having to fiddle the assumptions. Right up to his dying day he was looking for the assumption, that would not need to be fiddled.
    • Joan Robinson, Contributions to Modern Economics, Chapter 13, p. 145 (italics as per text...)
  • David Ricardo is without doubt the greatest representative of classical political economy. He carried his work begun by Smith to the farthest point possible without choosing one or the other of the roads which led out of the contradiction inherent in it.
    • Eric Roll, A History Of Economic Thought, Chapter IV, p. 176
  • It is, perhaps, a well founded objection to Mr. Ricardo, that he sometimes reasons upon abstract principles to which he gives too great a generalization.

External links[edit]

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