|David Ricardo, MP|
|Born||April 14, 1772|
|Died||September 11, 1823 (aged 51)|
David Ricardo (18 April 1772 – 11 September 1823) was a political economist, often credited with systematizing economics, and was one of the most influential of the classical economists, along with Thomas Malthus and Adam Smith. Events 43 BC - Battle of Forum Gallorum: Mark Antony, besieging Julius Caesar 's assassin Decimus Junius Brutus in Year 1772 ( MDCCLXXII) was a Leap year starting on Wednesday (link will display the full calendar of the Gregorian calendar (or a London ( ˈlʌndən is the capital and largest urban area in the United Kingdom. Events 9 - The Battle of the Teutoburg Forest ends 506 - The Bishops of Visigothic Gaul Year 1823 ( MDCCCXXIII) was a Common year starting on Wednesday (link will display the full calendar of the Gregorian Calendar (or a Common History See also History of Gloucestershire Gloucestershire is a historic county mentioned in the Anglo-Saxon Chronicle in the 10th century England is a Country which is part of the United Kingdom. Its inhabitants account for more than 83% of the total UK population whilst its mainland Events 1025 - Bolesław Chrobry is crowned in Gniezno, becoming the first King of Poland. Year 1772 ( MDCCLXXII) was a Leap year starting on Wednesday (link will display the full calendar of the Gregorian calendar (or a Events 9 - The Battle of the Teutoburg Forest ends 506 - The Bishops of Visigothic Gaul Year 1823 ( MDCCCXXIII) was a Common year starting on Wednesday (link will display the full calendar of the Gregorian Calendar (or a Common Political economy originally was the term for studying production buying and selling and their relations with law custom and government Classical economics is widely regarded as the first modern school of economic thought. Thomas Robert Malthus FRS (13 February 1766 – 23 December 1834 was an English political economist and demographer who expressed views Adam Smith ( baptised 16 June 1723 – 17 July 1790) was a Scottish moral philosopher and a pioneer of Political economy. He was also a member of Parliament, businessman, financier and speculator, and amassed a considerable fortune.
Born in London, Ricardo was the third of seventeen children in a Sephardic Jewish family (from Portugal) that emigrated from the Netherlands to Great Britain just prior to his birth. London ( ˈlʌndən is the capital and largest urban area in the United Kingdom. Sephardi Jews ( Hebrew: ספרדי, Standard Səfardi Tiberian Səp̄arədî; plural Portugal, officially the Portuguese Republic (República Portuguesa is a country on the Iberian Peninsula. The Netherlands ( Dutch:, ˈnedərlɑnt is the European part of the Kingdom of the Netherlands, which consists of the Netherlands the Netherlands See also Kingdom of Great Britain Great Britain (Breatainn Mhòr Prydain Fawr Breten Veur Graet Breetain is the larger of the two main islands At age 14, after a brief schooling in Holland, Ricardo joined his father at the London Stock Exchange, where he began to learn about the workings of finance. The London Stock Exchange or LSE is a Stock exchange located in London, England. This beginning set the stage for Ricardo's later success in the stock market and real estate.
Ricardo rejected the orthodox Jewish beliefs of his family and eloped with a Quaker, Priscilla Anne Wilkinson, when he was 21, leading to estrangement from his close family. Orthodox Judaism is the formulation of Judaism that adheres to a relatively strict interpretation and application of the laws and ethics first canonized It seems likely, for example, that his mother never spoke to him again. He had eight children including three sons, of whom Osman Ricardo (1795-1881; MP for Worcester 1847-1865) and another David Ricardo (1803-1864, MP for Stroud 1832-1833) became members of parliament, while the third, Mortimer Ricardo, served as an officer in the Life Guards and was a deputy lieutenant for Oxfordshire - and Mrs T Clutterbuck and a daughter who predeceased him. Worcester is a Borough constituency represented in the House of Commons of the Parliament of the United Kingdom. Stroud is a County constituency represented in the House of Commons of the Parliament of the United Kingdom. The House of Commons' is the Lower house of the Parliament of the United Kingdom, which also comprises the Sovereign and the House of Lords In the United Kingdom, a Deputy Lieutenant is one of several deputies to the Lord-Lieutenant of an English ceremonial county, Welsh preserved county History See also History of Oxfordshire The county of Oxfordshire was formed in the early years of the 10th century and is broadly situated in the He married at about the same time as he became a teacher at Gravesend Grammar School Unitarian. Unitarianism as a theology is the belief in the single personality of God in contrast to the doctrine of the Trinity (three persons in one God He was one of the original members of The Geological Society. The Geological Society of London is a Learned society based in the United Kingdom with the aim of "investigating the mineral structure of the Earth"
Ricardo became interested in economics after reading Adam Smith's The Wealth of Nations in 1799 on a vacation to the English resort of Bath. Adam Smith ( baptised 16 June 1723 – 17 July 1790) was a Scottish moral philosopher and a pioneer of Political economy. An Inquiry into the Nature and Causes of the Wealth of Nations is the Magnum opus of the Scottish economist Adam Smith. Bath is a city in Somerset in the south west of England It is situated west of London and south-east of Bristol. This was Ricardo's first contact with economics. He wrote his first economics article at age 37 and within another ten years he reached the height of his fame.
Ricardo's work with the stock exchange made him quite wealthy, which allowed him to retire from business in 1814 at the age of 42. He then purchased and moved to Gatcombe Park, an estate in Gloucestershire. Gatcombe Park is the private country home of Anne Princess Royal, situated in England between the Gloucestershire villages of Minchinhampton History See also History of Gloucestershire Gloucestershire is a historic county mentioned in the Anglo-Saxon Chronicle in the 10th century
In 1819, Ricardo took a seat in the House of Commons as the MP for Portarlington, an Irish rotten borough. The House of Commons' is the Lower house of the Parliament of the United Kingdom, which also comprises the Sovereign and the House of Lords A Member of Parliament, or MP, is a representative elected by the voters to a Parliament. Portarlington was a Rotten borough and is a former United Kingdom Parliament constituency in Ireland returning one MP Ireland (pronounced /ˈaɾlənd/ Éire) is the third largest island in Europe, and the twentieth-largest island in the world The term "rotten" or "decayed" borough referred to a parliamentary borough or Constituency in Great Britain and Ireland He held the seat until his death in 1823. In 1846 his nephew, John Lewis Ricardo, MP for Stoke-on-Trent, advocated free trade and the repeal of the Corn Laws. John Lewis Ricardo (1812 &ndash 2 August 1862, London) was a British businessman and politician A Member of Parliament, or MP, is a representative elected by the voters to a Parliament. Stoke-upon-Trent was a Parliamentary borough in Staffordshire, which elected two Members of Parliament (MPs to the House of Commons from Free trade is a system in which the trade of goods and services between or within countries flows unhindered by government-imposed restrictions The Corn Laws were Import tariffs designed to support domestic British corn prices against competition from less expensive foreign-grain imports between 1815 and 1846
Ricardo was a close friend of James Mill, who encouraged him in his political ambitions and writings about economics. James Mill (6 April 1773 &ndash 23 June 1836 was a Scottish Historian, Economist, Political theorist, and Philosopher. Other notable friends included Jeremy Bentham and Thomas Malthus, with whom Ricardo had a considerable debate (in correspondence) over such things as the role of land owners in a society. Jeremy Bentham ( IPA: or) (15 February 1748&ndash6 June 1832 was an English Jurist, Philosopher, and legal and Social reformer Thomas Robert Malthus FRS (13 February 1766 – 23 December 1834 was an English political economist and demographer who expressed views He also was a member of London's intellectuals, later becoming a member of Malthus' Political Economy Club, and a member of the King of Clubs. Political Economy Club Cambridge University The Political Economy Club was founded by James Mill and a circle of friends in 1821 in London, for the purpose of
Ricardo's most famous work is his Principles of Political Economy and Taxation. On the Principles of Political Economy and Taxation ( 1817) is a Book by David Ricardo on Economics. Ricardo opens the first chapter with a statement of the labour theory of value. The labor theories of value (LTV are theories in Economics according to which the values of Commodities are related to the labor needed to Later in this chapter, he demonstrates that prices do not correspond to this value. He retained the theory, however, as an approximation. Ricardo continued to work on his value theory to the end of his life. Value theory encompasses a range of approaches to understanding how why and to what degree humans should or do value things whether the thing is a person idea object or anything else
This book introduces the theory of comparative advantage. In international trade the principle of comparative advantage refers to the fact that although one country may have an absolute disadvantage with another value can be created for both According to Ricardo's theory, even if a country could produce everything more efficiently than another country, it would reap gains from specializing in what it was best at producing and trading with other nations. (Case & Fair, 1999: 812–818). Ricardo believed that wages should be left to free competition, so there should be no restrictions on the importation of agricultural products from abroad. Competition is a rivalry between individuals groups nations or animals for territory or resources
The benefits of comparative advantage are both distributional and related to improved real income. Within Ricardo's theory, distributional effects implied that foreign trade could not directly affect profits, because profits change only in response to the level of wages. The effects on income are always beneficial because foreign trade does not affect value.
Comparative advantage forms the basis of modern trade theory, reformulated as the Heckscher-Ohlin theorem, which states that a country has a comparative advantage in the production of a product if the country is relatively well-endowed with inputs that are used intensively in producing the product. The Heckscher-Ohlin theorem is one of the four critical theorems of the Heckscher-Ohlin model. (Case & Fair 1999, p. 822).
Like Adam Smith, Ricardo was also an opponent of protectionism for national economies, especially for agriculture. For the protectionist Australian political party from the 1880s to 1909 see Protectionist Party He believed that the British "Corn Laws" — tariffs on agriculture products — ensured that less productive domestic land would be harvested and rents would be driven up. The Corn Laws were Import tariffs designed to support domestic British corn prices against competition from less expensive foreign-grain imports between 1815 and 1846 (Case & Fair 1999, pp. 812, 813). Thus, the surplus would be directed more toward feudal landlords and away from the emerging industrial capitalists. Since landlords tended to squander their wealth on luxuries, rather than investments, Ricardo believed that the Corn Laws were leading to the economic stagnation of the British economy. Parliament repealed the Corn Laws in 1846.
Another idea associated with Ricardo is Ricardian equivalence, an argument suggesting that in some circumstances a government's choice of how to pay for its spending (i. Ricardian equivalence, (also known as the Barro-Ricardo equivalence proposition) is an Economic theory which suggests that it does not matter whether a government e. , whether to use tax revenue or issue debt and run a deficit) might have no effect on the economy. Ironically, while the proposition bears his name, he does not seem to have believed it. Economist Robert Barro is responsible for its modern prominence. Robert Joseph Barro (born September 28, 1944) is an American classical liberal Macroeconomist and the Paul M
Ricardo is responsible for developing theories of rent, wages, and profits. He defined rent as "the difference between the produce obtained by the employment of two equal quantities of capital and labor. " The model for this theory basically said that while only one grade of land is being used for cultivation, rent will not exist, but when multiple grades of land are being utilised, rent will be charged on the higher grades and will increase with the ascension of the grade. As such, Ricardo believed that the process of economic development, which increased land utilisation and eventually led to the cultivation of poorer land, benefited first and foremost the landowners because they would receive the rent payments either in money or in product.
Ricardo believed that in the long run, prices reflect the cost of production, and referred to this long run price as a Natural price. In Economics, the cost-of-production theory of value is the theory that the price of an object or condition is determined by the sum of the cost of the resources that went into The natural price of labour was the cost of its production, that cost of maintaining the labourer. If wages correspond to the natural price of labour, then wages would be at subsistence level. However, due to an improving economy, wages may remain indefinitely above subsistence level:
Notwithstanding the tendency of wages to conform to their natural rate, their market rate may, in an improving society, for an indefinite period, be constantly above it; for no sooner may the impulse, which an increased capital gives to a new demand for labour, be obeyed, than another increase of capital may produce the same effect; and thus, if the increase of capital be gradual and constant, the demand for labour may give a continued stimulus to an increase of people. …
It has been calculated, that under favourable circumstances population may be doubled in twenty-five years; but under the same favourable circumstances, the whole capital of a country might possibly be doubled in a shorter period. In that case, wages during the whole period would have a tendency to rise, because the demand for labour would increase still faster than the supply. (On the Principles of Political Economy, Chapter 5, "On Wages").
In his Theory of Profit, Ricardo stated that as real wages increase, real profits decrease because the revenue from the sale of manufactured goods is split between profits and wages. The term real wages refers to wages that have been adjusted for Inflation. He said in his Essay on Profits, "Profits depend on high or low wages, wages on the price of necessaries, and the price of necessaries chiefly on the price of food. "
Ricardo's publications included:
|Parliament of the United Kingdom|
|Member of Parliament for Portarlington|