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David Ricardo: Political Economy
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This book is a companion volume to the Royal Economic Soviety edition of The Works and Correspondence of David Ricardo, edited by Piero Sraffa with the collaboration of Maurice Dobb. It completes the record on Ricardian value theory by showing Ricardo’s reaction to Malthus’s pamphlet The Measure of Value Stated and Illustrated of 1823. Ricardo’s Notes are, in Sraffa’s words, ‘the only vonsiderable item’ not appearing in the Royal Economic Society edition of his works. In addition, the recent publication by Cambridge of the variorum edition of Malthus’s Principles of Political Economy, edited by J. M. Pullen, makes it possible to understand Malthus’s pamphlet as an intermediate step between the 1820 and 1836 editions of the Principles. In his introduction Pier Luigi Porta highlights the place of these Notes in the development of Ricardo’s thinking. When taken with Ricardo’s paper on ‘Absolute Value and Exchangeable Value’, these Notes provide the essentials of Ricardian value theory.
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In his 1817 book, On the Principles of Political Economy and Taxation, David Ricardo used the example of Portugal and England's trading of wine and cloth to illustrate the benefits of specialization and trade. His writing served as the basis for the principle of comparative advantage, under which total output will be increased if people and nations engage in those activities for which their advantages over others are the largest or their disadvantages are the smallest.
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David Ricardo, 1772-1823 The brilliant British economist David Ricardo was one the most important figures in the development of economic theory. He articulated and rigorously formulated the Classical system of political economy. The legacy of Ricardo dominated economic thinking throughout the 19th Century.
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Ricardo published the first edition of his magnum opus, The Principles of Political Economy and Taxation, in 1817. In 1819 he was elected to the British Parliament, where he was an outspoken opponent of trade protectionism and advocate for unfettered labor and capital markets. He served until his death in 1823, leaving an estate worth $100 million in today’s dollars. But Ricardo’s greatest legacy was the theorem of comparative advantage, in which he demonstrated the unambiguous and universal benefits of free trade.
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In that same summer of 1815, when Ricardo wrote Economical and Secure Currency, Mill was already pushing him to prepare a new and enlarged edition of the Essay on Profits. (This in the end resulted in the writing of Ricardo’s main work, On the Principles of Political Economy, and Taxation). By October 1815 Ricardo appears to have been convinced, and even desirous to write a book at last (VI, 314). He already conceives it as an inquiry upon “the Principles of Rent, Profit and Wages”:
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Along with Malthus, Ricardo was very concerned about the impact that rising populations would have on the economy. He argued that with more people, more land would have to be cultivated - nothing controversial so far! However, the return from this land would not be constant as the amount of capital available would not grow at the same rate. In fact the land would suffer from diminishing returns. Extra land that was brought into cultivation would become more and more marginal in terms of profitability, and eventually returns would not be enough to attract any further capital. At this point the maximum level of economic rent would have been earned.
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