LYCOS RETRIEVER 
David Ricardo: Corn Laws
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In 1818, Ricardo was asked to give evidence before the Commons Committee on the Usury Laws (he declared to be in favour of their repeal). In February 1819, as already mentioned, he entered Parliament, where a new bout of the controversy on the suspension of the cash payments had started, and both Houses had set up a Committee to consider the issue. Ricardo’s plan for ingot payments was high on the agenda of these Committees. Ricardo himself was asked to give evidence before both of them, and he declared himself to be in favour of immediate resumption. One of his first speeches in the Commons was on the resolutions embodying the recommendations of the Committee. (A resumption by steps was decided, which in two years would have made pounds convertible into bullion at the pre-suspension price of ₤3.17.10½ per ounce; convertibility into coin would have ensued after a year).
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Ricardo's most famous work is his Iron law of wages, a document which shows his capitalist tendencies. In this book Ricardo states that the wages of 19th century British workers should not be increased, though it was encouraged greatly by the masses. This was due to his observation of the direct link evident between money and population. An increase in income of workers equals an increase in children, resulting in a larger workforce. Such an increase means that employers will be forced to lower wages as their working population grows exponentially. Also, the surplus of workers and lower wages will combine to create a greater state of poverty that existed before wages were originally raised.
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In 1814, Ricardo retired from business life and bought an estate in Gloucestershire. A year later, he published his next major work in economics, Essay on the Influence of a Low Price of Corn on the Profits of Stock. In that work, Ricardo laid out what was to become a key idea in neoclassical economics: the so-called law of diminishing returns as it applied to labor and capital. Generally, as it applies to cultivation of crops, this law states that increasing the quantities of inputs will increase total production up to a point, but then output must decline, given that the land used is fixed in size. Although increasing production is possible, and perhaps common at first, at some point the marginal returns to additional inputs must decline, followed by their average returns and... total output must decline as well.
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Ricardo's law of rent was probably his most notable and influential discovery. It was based on the observation that the differing fertility of land yielded unequal profits to the capital and labour applied to it. Differential rent is the result of this variation in the fertility of land. This priciple was ... noted at much the same time by Malthus, West, Anderson, and others. His other great contribution, the law of comparative cost, or comparative advantage, demonstrated the benefits of international specialisation of the commodity composition of international trade. This was at the root of the free trade argument which set Britain firmly on the course of exporting manufactures and importing foodstuffs. His success in attaching other economists, particularly James Mill and McCulloch, to his views largely accounted for the remarkable dominance of his ideas ong after his own lifetime.
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Mr Mankiw's proposition, in essence, is the law of comparative advantage, first postulated by David Ricardo two centuries ago and demonstrated to astonishing effect since. Yet the Republican speaker of the House of Representatives, Dennis Hastert, joined Democrats in their rebuke of Mr Mankiw for approving of jobs going overseas; another Republican called for his resignation. The White House gave Mr Mankiw only lukewarm support—unsurprisingly, since George Bush recently signed a bill forbidding the outsourcing of federal contracts overseas. And the Democratic presidential contenders? Mr Mankiw had just written their attack ads.
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Of greater importance... was Ricardo's theory of wages. While not called as such in the text, this theory has been labeled the Iron Law of Wages—which states that wages must remain at the subsistence level. This level, according to Ricardo, is labor's natural price—the income which is necessary for the worker to exist. By applying the doctrine of laissez faire, Ricardo argued that wages should be left to free competition and should never be controlled by government interference. Capitalists agreed with his theory.
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