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David Ricardo: James Mill
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One of the ideas for which Ricardo is most remembered is the theory of comparative advantage. Ricardo demonstrated that for two nations without input factor mobility, specialization and trade could result in increased total output and lower costs than if each nation tried to produce in isolation. Since Ricardo’s exposition, the distinction between absolute and comparative advantage has been taught as one of the field’s most brilliant insights. Nations will export not only what they have an absolute advantage in producing, but ... what they have a comparative cost edge in producing. Some historians of economic thought have sought to show that others, specifically James Mill and Robert Torrens, stated the idea, or something close to it, prior to Ricardo. Such writers tend to discount Ricardo’s version of the theory as very short and possibly even incorrect.[6]
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This controversy, which constitutes the third phase of Ricardo's theory of value, appears to have begun with the appearance of McCulloch's highly laudatory notice of Ricardo's book in the Edinburgh Review for June, 1818. Six months earlier McCulloch, writing in the Scotsman, had defended certain of Ricardo's doctrines from a violent attack in the British Review.(56) But the ampler space of the quarterly first enabled him to present "an accurate exposition of the nature, as well of those general principles which Mr. Ricardo has been the first to ascertain, as of those which he has adopted from late writers, and combined with the others into one harmonious, consistent, and beautiful system."(57) Disproportionate in plan, marred by occasional inaccuracy and artificial simplicity, the review was ... characterized by all of the intelligibleness and definiteness of McCulloch's expository writing. It is still to be read with profit by the troubled student of the Ricardian economics, while for the period in which and the circles for whom it was written it was nothing short of a boon. Ricardo's gratification was pronounced. "My own doctrines" -- he wrote in acknowledgment to McCulloch -- "appear doubly convincing as explained by your able pen, and I have already heard in this retreat [Gatcomb Park] that those who could not understand me, most clearly comprehended you."(58) Even James Mill regarded it as "a masterly essay on the science, [and one that] will very much assist to disseminate correct views on a very intricate part of it."(59)
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Ricardo died suddenly of an ear infection in 1823, leaving an estate estimated at $126 million (current dollars). As Mark Blaug comments: “Ricardo may or may not have been the greatest economist that ever lived, but he was certainly the richest.”[3]
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