Ricardo, David

Economic thought

Appraisal

BIBLIOGRAPHY

David Ricardo (1772–1823), English economist, is best remembered for his theory of rent and his theory of comparative cost. He was the first to show that the ultimate incidence of a tax is governed by the laws of economic distribution, laws whose determination he regarded as “the principal problem of Political Economy.”

Ricardo was born in London, the third child in a Sephardic Jewish family that had emigrated from Holland in 1760. At the age of 11 he was sent back to Holland to attend a special school, the Talmud Tora, attached to the Portuguese Synagogue in Amsterdam. He returned to London three years later to work for his father, who had become a successful member of the stock exchange. In 1793, against the wishes of his parents, he married the daughter of a Quaker, and they promptly disinherited him. Striking out on his own, he soon accumulated a small fortune as a stockjobber and loan contractor. In 1814, at the age of 42, he retired from business, purchased an estate in Gloucestershire, and began to devote himself to literary pursuits.

Ricardo’s interest in economics dated back to 1799, when he accidentally came across a copy of Adam Smith’s Wealth of Nations. Ten years later he made his debut in print with a newspaper article on the bullion controversy, subsequently expanded into a vigorous pamphlet entitled The High Price of Bullion: A Proof of the Depreciation of Bank Notes (1810; in Works, vol. 3, pp. 47–127). The Bullion Committee report, which appeared the following year, agreed with Ricardo that the current inflation was due to the Bank of England’s failure to restrict the issue of currency. The fame of the committee’s report lent prestige to Ricardo’s tract, so much so that later generations incorrectly credited Ricardo with inspiring the report.

In 1814 he turned his attention to commercial policy and a year later published the important Essay on the Influence of a Low Price of Corn on the Profits of Stock (in Works, vol. 4, pp. 1–41). It appeared close upon similar essays by Robert Torrens, Edward West, and Thomas Robert Malthus. With varying degrees of clarity, all four pamphlets expressed the idea that was soon to become the cornerstone of classical political economy, the law of diminishing returns to additions of capital and labor applied to land. But only Ricardo went on to develop the implications of this proposition in a major treatise, On the Principles of Political Economy and Taxation (1817; see Works, vol. 1). The story of how he was urged, goaded, and even bullied into completing this task by his friend James Mill is now well known, owing to Piero Sraffa’s recovery of the Ricardo-Mill correspondence, which is included in the Works and Correspondence (vols. 6–9).

Further tracts by Ricardo appeared in 1817, 1819, and 1822. In 1821 he published the third edition of the Principles, adding a controversial chapter “On Machinery,” in which he conceded that technological progress might prove injurious to the working class (see Barton, John). In 1819 Ricardo obtained a seat in the House of Commons and for the next few years took an active part in parliamentary discussions of current issues. He made a grand tour of the Continent in 1822, keeping a travel journal, which is included in the Works and Correspondence (vol. 10, pp. 175–352). He died of a cerebral infection in 1823, at his estate, Gatcomb Park, leaving a wife and seven children. At his death his estate was valued at about £750,000, of which a third was in landed property and the rest in English and French government bonds (the present purchasing power of the estate would be approximately five times as much).

There never was an economist so single-minded in his devotion to “the dismal science” as Ricardo. He did spend some time studying the natural sciences, particularly geology—which then enjoyed something of the glamour that nuclear physics does nowadays—collecting minerals and participating in the management of the Geological Society of London. But with these exceptions, all his intellectual efforts were given to economics, and his correspondence rarely touches on other topics. Politically he was a Benthamite in that he favored universal male suffrage and as much parliamentary reform as was necessary to bring this about. If he had definite philosophical convictions, they were those of British empiricism as embodied in the works of Bacon, Hobbes, and Locke. He became a Unitarian after his marriage but was probably as near to atheism as Bentham was. There is reason to think that Ricardo followed James Mill in advocating the spread of birth control devices among the working class, although, unlike Mill, he never committed himself on the subject in print.

Economic thought

The influence of Ricardo’s treatise made itself felt almost as soon as it was published, and for over half a century Ricardo dominated economic thinking in Britain. The leading periodicals and even the Encyclopaedia Britannica fell into the hands of his disciples; popular literature echoed Ricardian ideas; and Parliament increasingly succumbed to Ricardian policy proposals. Ricardo’s appeal rested on his ability to seize hold of a wide range of significant problems with a simple analytical model that involved only a few strategic variables and yielded, after a few elementary manipulations, dramatic conclusions of a distinctly practical nature. In short, he was the first to master the art that later brought success to Keynes.

At the heart of Ricardo’s system is the notion that economic growth must sooner or later be arrested owing to a scarcity of natural resources. In the simple version of his model, as expounded in the 1815 essay, the whole economy is a giant farm, distributing its product among landlord, tenant farmer, and hired laborer. The Malthusian tendency of population to increase up to the limits set by the means of subsistence provides a virtually unlimited supply of labor that can be employed at a constant real wage fixed in terms of corn (or wheat). This, of course, is the notorious “iron law of wages.” Every worker is equipped with the same amount of fixed capital (say, a spade), which, being combined with every worker in the same proportion, enters as a simple multiple and, hence, can also be measured in terms of corn. In other words, corn is the only output of the giant farm, and it is also the only input. As the labor force increases, extra corn to feed the extra mouths can be produced only by extending cultivation to less fertile land or by applying additional capital-and-labor to land already under cultivation with diminishing results. The difference between the net corn product per worker on the least fertile land and the constant corn wage per worker goes to the tenant farmer as profit. Since farmers outbid each other for the best land, the real advantages of working superior land accrue to the landowner in the form of rising rents. As more land is taken up, the net produce per worker falls, whereas the real wage remains the same. Obviously, profits per worker decline. At the same time, the corn value of the capital per worker increases because corn is continually becoming more expensive to produce in terms of real resources used up. Divide the falling profits per worker by the rising capital per worker, and it follows that the rate of profit on capital, which supplies the motive for investment, declines. Eventually, capital accumulation must come to an end.

In the Principles this simple one-sector model was replaced by a three-sector model, but the argument and the conclusions reached were essentially the same as in the essay of 1815. The three-sector model gave rise to the question how best to measure the variables employed, and the first chapter of the Principles turned into a veritable maze for the reader as Ricardo pursued “the invariable measure of value,” which seemed forever to elude him. He failed to realize that an index-number problem such as he had posed cannot, in the nature of the case, be perfectly resolved.

The root of the trouble being the declining yield of wheat per acre of land, it is evident that the short-run solution is to import cheap wheat from countries better endowed with fertile land in exchange for low-cost manufactured goods. In the long run other solutions may be looked for: a change in workers’ diets to lessen the dependence on wheaten bread; an effort to slow down the rate of growth of population; and, last, an attempt to foster technical change, particularly of the land-saving variety. Ricardo did not neglect these long-term solutions, but, it is fair to say, he dealt with them in a perfunctory manner. The fact is that despite the numerous references to capital accumulation and population growth, Ricardo’s model is not really concerned with problems of economic growth in the long run. His interest in practical results—paradoxical in view of the high level of abstraction that he achieved—led him to emphasize the foreign trade solution to the growth dilemma. In so doing he came to attack the existing corn laws, which protected British wheat farmers by prohibiting foreign wheat except in years of famine prices. Eager to show that Britain would benefit from specializing in manufactured goods and importing the bulk of its food supply, he hit upon the law of comparative cost as a proof of his case.

Adam Smith had taught that it pays a country to concentrate on the production of those goods which it can produce more cheaply in absolute terms than any other country can. Earlier in the eighteenth century a few authors had advanced the wider rule that each country will find it profitable to import those goods which it can obtain for exports at less cost than their domestic production would entail. Almost no one realized that this meant that under free trade all goods are not necessarily produced in countries where their real cost of production is lowest—it might pay a country to import a product even though it could be produced at less cost at home than abroad. The Ricardian doctrine of comparative cost is simply a rigorous restatement of the informal eighteenth-century rule.

Ricardo used a single numerical example, involving two countries and two goods. He was able to demonstrate that it would benefit England to specialize in “cloth,” even if Portugal could produce “cloth” and “wine” more cheaply, provided England had a relative cost advantage in cloth. And if Portugal specialized in wine, where it had an even greater cost advantage than in cloth, it turned out that both countries were better off: with given resources, both countries could enjoy more of both cloth and wine because they would reap the advantages of an international division of labor. Here is the fountainhead of all nineteenth-century free trade doctrine! Although the corn laws were not in fact repealed until 1846, Ricardo’s writings helped to make free trade a popular objective of British policy. Unwittingly, Ricardo provided the theoretical justification for the long-run solution to the growth problem which Britain actually adopted in the nineteenth century: Britain became the “workshop of the world” and bought most of her food abroad.

Ricardo did much more than state the law of comparative cost. He also saw its implications for international wage and price levels. David Hume had shown earlier that each country’s exports and imports are automatically brought into balance under an international gold standard by the effect of gold flows acting on domestic price levels. A country with an export surplus must attract gold from abroad; the gold inflow, by raising all prices within the country, then eliminates the excess of exports over imports. Similarly, an import surplus leads to a loss of gold and a self-correcting decline in prices. Ricardo now realized that if Portugal has an absolute advantage in both wine and cloth but a great relative advantage in wine, foreign trade with England is possible only if money wage rates in Portugal are higher than those in England. If the wage rate in terms of gold is the same in the two countries, Portugal will not import cloth, since Portuguese consumers can get cloth more cheaply from domestic suppliers. As a result, England will be forced to ship gold to Portugal to pay for wine imports, and this will continue until gold wages and prices in Portugal rise enough to make it profitable for the Portuguese to import English cloth. In general, then, the low-cost country has the higher money wage rate, and hence higher money prices for similar goods. There is, as Ricardo said, “a natural distribution of specie” beween the trading nations of the world that tends, in the absence of tariffs, not merely to equilibrate each country’s exports and imports, but also to produce such relative price and wage levels between countries as to induce each to produce those goods in which it has a comparative advantage. And although the world is now off the gold standard, it remains true that everyone who has studied Ricardo’s argument can understand why a high level of wages in a country does not necessarily prevent that country from competing successfully in international trade.

The same forces that depress the rate of return on capital in Ricardo’s model also raise rents, although Ricardo never made it very clear whether he meant rents per acre of land or the rental share of the total product. Be that as it may, Ricardo viewed resources as shifting between agriculture and manufacturing in search of maximum returns, but he never conceived of land itself as shifting among competing uses. When, in the Ricardian model, cultivation is said to be extended, the new land is simply taken up freely, because land is treated not only as if it were completely fixed in supply but also as if it were absolutely specialized in use. It is this conception of land as a free “gift of Nature,” having no use other than the production of wheat, that led Ricardo to the conclusion that rent is price-determined, not price-determining; in a famous formula, one of the many with which Ricardo peppered his otherwise pedestrian prose, “Corn is not high because rent is paid, but rent is paid because corn is high.” From the notion that rent is not a reward for any economic service rendered by landowners, Ricardo drew the practical implication that the remission of rents from landlords to tenants would not affect the price of wheat or the rate of profit in agriculture. James Mill went a step further and concluded that the appropriation of rents by the state would not affect agricultural output, a proposition that Henry George made his own when he called for taxing the “unearned increments” in rental values. The popularity of single-tax propaganda in the latter half of the nineteenth century did much to keep the name of Ricardo alive, and via Henry George’s Progress and Poverty Ricardo even cast a shadow on the formation of the Fabian Society. In a period “when the political power of the landowning aristocracy in England still barred the way to effective electoral reform, a theory that attributed economic difficulties to agricultural protection, asserting as a scientific conclusion that “the interest of the landlord is always opposed to that of the consumer and manufacturer,” could not fail to take hold of public opinion.

While Richard Cobden and John Bright were adulterating Ricardo’s arguments to suit the needs of the great campaign they were waging for immediate repeal of the corn laws, certain radical writers were putting forth labor’s exclusive claim to the total national product, a claim which they argued was a simple logical deduction from the labor theory of value. These were the so-called “Ricardian socialists,” forerunners of Karl Marx. The label is to some extent a misnomer, because these men, followers of Robert Owen, cared nothing for Ricardo except insofar as he sanctioned the labor theory of value. The notion that profit and rent constitute a deduction from values created by labor alone stems from The Wealth of Nations, not from Ricardo’s Principles. Indeed, if by a labor theory of value we mean a theory that holds that labor is the sole determinant of relative prices, Ricardo cannot be considered a proponent of the theory. It is true that he believed that the ratios in which goods exchange are quantitatively more influenced by relative labor costs than by, say, relative interest charges. It is also true that he held a cost theory of value which left out the influence of demand. But this is still a far cry from what the Ricardian socialists and Marx himself meant by the labor theory of value. It never occurred to Ricardo to deduce anything about the nature of profit from his theory of value, and it is precisely this that separates Ricardo from Marx. But however misleading the common impression that Ricardo was responsible for the genesis of British socialism, the appeal to Ricardo by socialist writers, particularly the tribute that Marx paid him, gave Ricardo a new audience at a time when his influence was in other respects beginning to wane.

Appraisal

It is revealing to compare Ricardo to Adam Smith, the founder of classical economics. As a rigorous theorist, Ricardo was obviously far ahead of Adam Smith. On the other hand, The Wealth of Nations contains more in the way of substantial generalizations on the workings of economic systems than does Ricardo’s Principles— more, perhaps, than any other treatise written in the nineteenth century, with the exception of Alfred Marshall’s magnum opus. If the problem of economics is the allocation of limited means among unlimited competing ends, as we are sometimes told, then Adam Smith contributed more to economics than did Ricardo; the only place where Ricardo addressed himself specifically to the allocation problem was in the chapter on foreign trade, but here, at any rate, he saw further and deeper than Adam Smith. If the problem of economics is growth and development—a common assertion nowadays—there is again more in Adam Smith than in Ricardo. But if economics is essentially an engine of analysis, a method of thinking rather than a body of concrete results, Ricardo literally invented the technique of economists. His gift for heroic abstractions produced one of the most impressive models, judged by scope and practical import, in the entire history of economic theory.

Ricardo’s style of thinking is exemplified by his treatment of taxation, which takes up more than one-third of the Principles of Political Economy and Taxation. The discussion is very little connected with the actual taxes prevailing in his time, with the technical problems of tax administration, with the crying need for fiscal reform; instead, it traces the broad economic consequences of taxes in general with respect to the accumulation of capital, the distribution of national income, and the price level. The tax chapters simply set forth the general implications of Ricardo’s theoretical scheme, and their value is solely that of demonstrating his superb logical powers.

As long as the corn laws remained in force, the issue of free trade gave significance to Ricardo’s doctrines. When repeal came, John Stuart Mill’s Principles of Political Economy, published two years later, brought new authority to the Ricardian system suitably amended. After 1870, however, most economists turned their backs on what they understood to be the Ricardian theory of value and agreed with William Stanley Jevons that Ricardo had “shunted the car of economic science to a wrong line” (1871). Marx’s praise did not enhance Ricardo’s reputation among academic economists. But the last decade of the nineteenth century saw a change in attitude, as a number of writers were suddenly struck by the idea that the old-fashioned Ricardian theory of rent was really a special case of a much more general theory. Ricardo had shown that the final dose of labor-and-capital on an intensively used rent-yielding piece of land adds nothing to rent but consists solely of wages and interest, rent being due to the superior productivity of the intramarginal units. Philip Henry Wicksteed, Knut Wicksell, and John Bates Clark realized that there is nothing unique about a no-rent margin; when land is the variable factor and labor-and-capital is the fixed factor, the margin will be a no-wage, no-interest margin. With that insight the general marginal productivity theory of distribution was born, and to Ricardo’s other accomplishments must be added that of having anticipated marginal analysis. In recent years concern over the problem of aggregate effective demand has caused many economists to agree with Keynes that “the complete domination of Ricardo’s [approach] for a period of a hundred years has been a disaster to the progress of economics” (Keynes [1933] 1956, p. 33). But this is a harsh judgment which supposes that but for Ricardo’s magisterial influence, economics would have addressed itself in the past to the macroeconomic problem of unemployment. Ricardo’s avowal of the famous “law of markets,” asserting a tendency toward full employment equilibrium, was poorly thought out and remained little more than a dogma. As a monetary theorist Ricardo was not even representative of the best work of his own day. Still, the law of comparative cost and the method of comparative static analysis have survived intact. And the central problem that Ricardo posed, namely, how the changes in the relative shares of land, labor, and capital are connected with the rate of capital accumulation, remains the abiding concern of modern economists. In that sense Ricardo is still with us.

Mark Blaug

[For the historical context of Ricardo’s work, see the biographies ofHume; Malthus; Smith, Adam; Torrens; West; for discussion of the subsequent development of his ideas, seeRent; Value, Labor Theory Of; and the biographies ofClark, John Bates; George; Jevons; Marx; Mill; Wicksell; Wicksteed.]

BIBLIOGRAPHY

Ashton, Thomas S.; and Sayers, R. S. (editors) 1953 Papers in English Monetary History. Oxford: Clarendon. → Discusses Ricardian monetary theory.

Biaujeaud, Huguette 1933 Essai sur la théorie Ricardienne de la valeur. Paris: Sirey.

Blaug, Mark 1958 Ricardian Economics: A Historical Study. Yale Studies in Economics, No. 8. New Haven: Yale Univ. Press. → The rise and fall of the school of Ricardo in the first half of the nineteenth century.

Blaug, Mark 1962 Economic Theory in Retrospect. Homewood, 111.: Irwin. → Chapter 4 is a treatment of Ricardo’s system in modern analytical terms. Also contains bibliographical references.

Franklin, Burt; and Legman, G. 1949 David Ricardo and Ricardian Theory: A Bibliographical Checklist. New York: Franklin. → Contains serious misprints, and the annotation is frequently misleading. It is, however, the only checklist available.

Hollander, Jacob H. 1910 David Ricardo: A Centenary Estimate. Baltimore: Johns Hopkins Press. → Still the best introduction to Ricardo.

Jevons, William S. (1871) 1957 The Theory of Political Economy. 5th ed. New York: Kelley Reprints.

Keynes, John M. (1933) 1956 Robert Malthus: The First of the Cambridge Economists. Pages 11–38 in John M. Keynes, Essays and Sketches in Biography. New York: Meridian. → A paperback edition was published in 1963 by Norton.

Ricardo, DavidWorks and Correspondence. Edited by Piero Sraffa. 10 vols. Cambridge Univ. Press, 1951–1955. → For Ricardo’s theory of value, see Sraffa’s introduction. Volume 1: On the Principles of Political Economy and Taxation. Volume 2: Notes on Malthus’s Principles of Political Economy. Volume 3: Pamphlets and Papers, 1809–1811. Volume 4: Pamphlets and Papers, 1815–1823. Volume 5: Speeches and Evidence. Volume 6: Letters, 1810–1815. Volume 7: Letters, 1816–1818. Volume 8: Letters, 1819-June 1821. Volume 9: Letters, July 1821–1823. Volume 10: Biographical Miscellany.

St. Clair, Oswald 1957 A Key to Ricardo. New York: Kelley Reprints; London: Routledge. → An excellent guide to “what Ricardo really said.” Virtually a compilation of Ricardo’s opinions.

Shoup, Carl S. (1950) 1960 Ricardo on Taxation: An Analysis of the Chapters on Taxation in David Ricardo’s Principles. New York: Columbia Univ. Press. → Ricardo’s views on public finance.

Viner, Jacob 1937 Studies in the Theory of International Trade. New York: Harper. → Discusses Ricardo’s contribution.

David Ricardo

The English economist David Ricardo (1772-1823) was a founder of political economy. His economics armed reformers attacking the agricultural aristocracy's political, social, and economic privileges.

David Ricardo was born in London on April 19, 1772, the son of a Jewish merchant-banker émigré from Holland. Ricardo joined his father as a stockbroker at the age of 14. When he married a Quaker, his orthodox father cut him off. Ricardo became a Unitarian, and at 22, with a capital of £800 and support from the financial community, he became an independent stockbroker. At 42 he retired with a fortune of about £1 million and established himself as a landed proprietor.

Ricardo was an independent member of Parliament for the pocket borough of Portarlington from 1819 until his death. He supported a tax on capital to pay off the national debt; currency reform; abolition of the Corn Laws protecting British wheat; parliamentary, poor-law, legal, and military reform; a secret ballot; and Catholic emancipation; he also condemned political repression.

Ricardo's reputation rests upon On the Principles of Political Economy and Taxation (1817; rev. 3d ed. 1821), an analysis of the distribution of a fixed amount of wealth among three classes: the owner of land who receives rent, the owner of capital who earns profits, and the laborer who gets wages. Ricardo set out to "determine the laws which regulate this distribution" in relation to both the rate of capital growth and the yield of wheat per acre. Although the analysis is abstract, often ambiguous, and disorganized, seven related economic laws can be extracted.

First, prices are determined by the cost of production. Second, the value of any item is set by the quantity of labor used to produce it. In the revised edition of 1821, Ricardo suggested that value might also be influenced by the cost of production. A third law, a theory of rent, was based upon Malthus's prediction of increasing population. When population increases, more food is needed and less fertile land is planted. Rent is the difference in the price of wheat per acre between the most and least productive land. As population grows, rent increases at the expense of capital's profits and labor's wages. The interests of landlords were not only antithetical to the rest of the community, but landlords and capitalists were necessary enemies.

The fourth and fifth laws deal with the wages fund and the natural price of labor. These laws assumed that the price of labor, like other market prices, fluctuated with supply and demand; but at any given time there was a fixed supply of money for the payment of wages. This wages fund was the amount of capital in circulation. As capital increased, population grew, less fertile land was planted, rent increased, capital profits decreased, and wages dropped. Ricardo held that population will tend constantly to rise above the wages fund, especially in old countries like England, causing the working man's standard of living to fall. Disaster was arrested only by population reduction, essentially through infant mortality. Ricardo, like Thomas Malthus, never anticipated either population control or technological increase of food supplies. If wages fell below subsistence level, population decreased; when wages neither increased nor decreased the labor supply, they reached their "natural" or subsistence level. Popularizers of Ricardo's general model interpreted this to mean that most people were doomed inexorably to bare subsistence.

The sixth law argues the "diminishing returns" of profits, the earnings of the most useful class. As increasingly inferior land is cultivated, rent and food prices rise, and profits fall since the higher wages required for subsistence wages come out of the existing amount of circulating capital. The final law, the quantity theory of money, applies value theory to gold: the rise or fall in prices depends inversely upon the amount of money in circulation.

Ricardo's other important writings were The High Price of Bullion (1810); "An Essay on the Influence of a Low Price on Corn on the Profits of Stock" (1815); "Funding System" (1820), published posthumously in the Encyclopaedia Britannica: Supplement (1824); and the "Plan for the Establishment of a National Bank" (1824), also published posthumously. He died at Gatcombe Park, Gloucestershire, on Sept. 11, 1823.

Further Reading

The definitive edition of Ricardo's Works and Correspondence is edited by P. Sraffa with the collaboration of M. H. Dobb (10 vols., 1951-1955). A helpful guide through the intricacies and inconsistencies of the Ricardian system is Oswald St. Clair, A Key to Ricardo (1957). Mark Blaug, Ricardian Economics: A Historical Study (1958), deals with Ricardo within the general context of his time. A chapter on Ricardo in Robert Lekachman, A History of Economic Ideas (1959), provides a lucid, less technical discussion of Ricardo's ideas. □

David Ricardo 1772–1823, British economist, of Dutch-Jewish parentage. At the age of 20 he entered business as a stockbroker and was so skillful in the management of his affairs that within five years he had amassed a huge fortune. He then turned much of his attention to scientific topics, and in 1799, after reading Adam Smith's The Wealth of Nations, began to study political economy. However, 10 years elapsed before the appearance of his first writings on the subject, a series of letters to the Morning Chronicle. A number of pamphlets and tracts followed, in turn succeeded by Ricardo's major work, The Principles of Political Economy and Taxation (1817). In that book he presented most of his important theories, especially those concerned with the determination of wages and value. For the problem of wages he proposed the "iron law of wages," according to which wages tend to stabilize around the subsistence level. Any rise in wage rates above subsistence will cause the working population to increase to the point that heightened competition among the glut of laborers will merely cause their wages to fall back to the subsistence level. As far as value was concerned, Ricardo stated that the value of almost any good was, essentially, a function of the labor needed to produce it. According to his labor theory of value, a clock costing $100 required 10 times as much labor for its production as did a pair of shoes costing $10. Ricardo was also concerned with the subject of international trade, and for that he developed the theory of comparative advantage, still widely accepted among economists. In a now classic illustration, Ricardo explained how it was advantageous for England to produce cloth and Portugal to produce wine, as long as both countries traded freely with each other, even though Portugal might have produced both wine and cloth at a lower cost than England did. Although his publications were often turgidly written, with little of the insight and breadth of knowledge that characterized Adam Smith's work, Ricardo was an enormously influential economic thinker. His rigidly deductive and scientific method of analysis served as a model for subsequent work in economics.

Bibliography: See studies by J. H. Hollander (1910, repr. 1968), O. St. Clair (1957, repr. 1965), and M. Blang (1958, repr. 1973).

Ricardo, David (1772–1823) British political economist who, with Adam SMITH, founded British classical economics. In 1819–23 he was an MP, supporting FREE TRADE, a return to the gold standard, and the repeal of the CORN LAWS. He is best remembered for his Principles of Political Economy and Taxation (1817), arguing that the value of a commodity is related to amount of labour required to make it — a premise later adopted by Karl MARX. He also formulated the law of comparative advantage in international trade.

Ricardo, David (1772–1823) English political economist. He advocated free trade and the repeal of the Corn Laws. Ricardo's labour theory of value (that the price of commodities reflects the labour involved in their production), advanced in Principles of Political Economy and Taxation (1817), had a profound influence on Karl Marx.