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RICARDO, DAVID (1772-1823)

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Originally appearing in Volume V23, Page 287 of the 1911 Encyclopedia Britannica.
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RICARDO, See also:DAVID (1772-1823) , See also:English economist, was See also:born in See also:London on the 19th of See also:April 1772, of Jewish origin. His See also:father, who was of Dutch See also:birth, See also:bore an See also:honourable See also:character and was a successful member of the Stock See also:Exchange. At the See also:age of fourteen Ricardo entered his father's See also:office, where he showed much aptitude for business. About the See also:time when he attained his See also:majority he abandoned the See also:Hebrew faith and conformed to the See also:Anglican See also:Church, a See also:change which seems to have been connected with his See also:marriage to See also:Miss See also:Wilkinson, which took See also:place in 1793. In consequence of the step thus taken he was separated from his See also:family and thrown on his own resources. His ability and uprightness were known, and he at once entered on such a successful career in the profession to which he had been brought up that at the age of twenty-five, we are told, he was already See also:rich. He now began to occupy himself with scientific pursuits, and gave some See also:attention to See also:mathematics as well as to See also:chemistry and See also:mineralogy; but, having met with See also:Adam See also:Smith's See also:great See also:work, he threw himself with ardour into the study of See also:political See also:economy. His first publication (1809) was The High See also:Price of See also:Bullion a See also:Proof of the Depreciation of See also:Bank Notes. This See also:tract was an expansion of a See also:series of articles which the author had contributed to the See also:Morning See also:Chronicle. It gave a fresh stimulus to the controversy, which had for some time been discontinued, respecting the resumption of See also:cash payments, and indirectly led to the See also:appointment of a See also:committee of the See also:House of See also:Commons, commonly known as the Bullion Committee, to consider the whole question. The See also:report of the committee asserted the same views which Ricardo had put forward, and recommended the See also:repeal of the Bank Restriction See also:Act. Not-withstanding this, the House of Commons declared in the See also:teeth of the facts that See also:paper had undergone no depreciation.

Ricardo's first tract, as well as another on the same subject, attracted much attention. In 1811 he made the acquaintance of See also:

James See also:Mill, whose introduction to him arose out of the publication of Mill's tract entitled See also:Commerce Defended. Whilst Mill doubtless largely affected his political ideas, he was, on his See also:side, under obligations to Ricardo in the purely economic See also:field; Mill said in 1823 that he himself and J. R. M`Culloch were Ricardo's disciples, and, he added, his only genuine ones. In 1815, when the See also:Corn See also:Laws were under discussion, he published his See also:Essay on the See also:Influence of a See also:Low Price of Corn on the Profits of Stock. This was directed against a See also:recent tract by See also:Malthus entitled Grounds of an See also:Opinion on the Policy of Restraining the See also:Free Importation of See also:Foreign Corn. The reasonings of the essay are based on the theory of See also:rent which has often been called by the name of Ricardo; but the author distinctly states that it was not due to him. " In all that I have said concerning the origin and progress of rent I have briefly repeated, and endeavoured to elucidate, the principles which Malthus has so ably laid down on the same subject in his Inquiry into the Nature and Progress of Rent." We now know that the theory had been fully stated, before the time of Malthus, by See also:Anderson; it is in any See also:case clear that it was no See also:discovery of Ricardo. Ricardo states in this essay a set of propositions, most of them deductions from the theory of rent, which are in substance the same as those afterwards embodied in the Principles, and regarded as characteristic of his See also:system, such as that increase of See also:wages does not raise prices; that profits can be raised only by a fall in wages and diminished only by a rise in wages; and that profits, in the whole progress of society, are determined by the cost of the See also:production of the See also:food which is raised at the greatest expense. It does not appear that, excepting the theory of foreign See also:trade, anything of the nature of fundamental See also:doctrine, as distinct from the See also:special subjects of banking and See also:taxation, is laid down in the Principles which does not already appear in this tract. We find in it, too, the same exclusive regard to the See also:interest of the capitalist class, and the same See also:identification of their interest with that of the whole nation, which are generally characteristic of his writings.

In the Proposals for an Economical and Secure Currency (r816) he first disposes of the chimera of a currency without a specific See also:

standard, and pronounces in favour of a single See also:metal, with a preference for See also:silver, as the standard. Ricardo's See also:chief work, Principles of Political Economy and Taxation, appeared in 1817. The fundamental doctrine of this work is that, on the See also:hypothesis of free competition, exchange value is determined by the labour expended in production,—a proposition not new, nor, except with considerable See also:limitation and explanation, true, and of little See also:practical use, as " amount of labour " is a vague expression, and the thing intended is incapable of exact estimation. Ricardo's theory of See also:distribution has been briefly enunciated as follows: " (r) The demand for food determines the margin of cultivation; (2) this margin determines rent; (3) the amount necessary to maintain the labourer determines wages; (4) the difference between the amount produced by a given quantity of labour at the margin and the wages of that labour determines profit." These theorems are too absolutely stated, and require much modification to adapt them to real See also:life. His theory of foreign trade has been embodied in the two propositions: " (I) Inter-See also:national values are not determined in the same way as domestic values; (2) the See also:medium of exchange is distributed so as to bring trade to the See also:condition it would be in if it were conducted by See also:barter." A considerable portion of the work is devoted to a study of taxation, which requires to be considered as a See also:part of the problem of distribution. A tax is not always paid by those on whom it is imposed; it is therefore necessary to determine the ultimate, as distinguished from the immediate, incidence of every See also:form of ;taxation. Smith had already dealt with this question; Ricardo develops and criticizes his results. The conclusions at which he arrives are in the See also:main as follows: a tax on raw produce falls on the consumer, but will also diminish profits; a tax on rents on the landlord; taxes on houses will be divided between the occupier and the ground landlord; taxes on profits will be paid by the consumer, and taxes on wages by the capitalist. In 1819 Ricardo, having retired from business and become a landed proprietor, entered See also:parliament as' member for See also:Portarlington. He was at first diffident and embarrassed in speaking, but gradually overcame these difficulties, and was heard with much attention and deference, especially when he addressed the House on economic questions. He probably contributed in a considerable degree to bringing about the change of opinion on the question of free trade which ultimately led to the legislation of See also:Sir See also:Robert See also:Peel on that subject. . In 1820 he contributed to the supplement of the See also:Encyclopaedia Britannica (6th ed.) an " Essay on the Funding System." In this besides giving an See also:historical See also:account (founded on Dr Robert See also:Hamilton's valuable work On the National See also:Debt, 1813, 3rd ed., 1818) of the several successive forms of the sinking fund, he urges that nations should defray their expenses, whether See also:ordinary or extraordinary, at the time when they are incurred, instead .of providing for them by loans.

In 1822 he published a tract On See also:

Protection to See also:Agriculture, which is an able application to controversy of the See also:general principles laid down in his systematic work. Its arguments and conclusions are therefore subject to the same limitations which those fundamental principles require. In his See also:Plan for the See also:Establishment of a National Bank, published posthumously in 1824, he proposes that the issue of the paper currency should be taken out of the hands of the Bank of See also:England and vested in commissioners appointed by the See also:government. The tract describes in detail the See also:measures to be adopted for the introduction and working of the system. A certain step towards realizing the See also:objects of his See also:scheme, though on different lines from Ricardo's, was taken in Sir Robert Peel's act of 1844, by which the See also:discount business of the bank was separated from the issue See also:department. Ricardo died on the rrth of See also:September 1823, at his seat(Gatcomb See also:Park) in See also:Gloucestershire, from a cerebral See also:affection resulting from disease of the See also:ear. James Mill, who was intimately acquainted with him, says (in a See also:letter to See also:Napier of See also:November 1818) that he knew not a better See also:man, and on the occasion of his See also:death published a highly eulogistic See also:notice of him in the Morning Chronicle. A lectureship on political economy, to exist for ten years, was founded in See also:commemoration of him, M'Culloch being chosen to fill it. In forming a general See also:judgment respecting Ricardo, we must have in view not so much the See also:minor writings as the Principles, in which his economic system is expounded as a whole. By a study of this work we are led to the conclusion that he was an economist only, not at all a social philosopher in the wider sense, like Adam Smith or See also:John Mill. He had great acuteness, but little breadth. For any large treatment of moral and political questions he seems to have been alike by nature and preparation unfitted; and there is no See also:evidence of his having had any but the most ordinary and narrow views of the great social problems.

He shows no trace of that hearty sympathy with the working classes which breaks out in several passages of the See also:

Wealth of Nations; we ought, perhaps, with Held, to regard it as a merit in Ricardo that he does not See also:cover with See also:fine phrases his deficiency in warmth of social sentiment. The See also:idea of the active capitalist having any duties towards his employes never seems to occur to him; the labourer is, in fact, merely an See also:instrument in the hands of the capitalist, a See also:pawn in the See also:game he plays. He first introduced into See also:economics on a great See also:scale the method of See also:deduction from a priori assumptions. The conclusions so arrived at have often been treated as if they were directly applicable to real life,. and indeed to the economic phenomena of all times and places. But the truth of Ricardo's theorems is now by his warmest admirers admitted to be hypothetical only. See also:Bagehot seems right in believing that Ricardo himself had no consciousness of the limitations to which his doctrines are subject. Be this as it may, we now see that the only basis on which these doctrines could be allowed to stand as a permanent part of economic See also:science is that on which they are placed by See also:Roscher, namely, as a See also:stage in the preparatory work of the economist, who, beginning with such abstractions, afterwards turns from them, not in practice merely, but in the completed theory, to real life and men as they actually are or have been. The criticisms to which Ricardo's general economic scheme is open do not hold with respect to his treatment of. the subjects of currency and banking. These form precisely that See also:branch of economics into which moral ideas (beyond the See also:plain prescriptions of honesty) can scarcely be said to enter, and where the operation of purely See also:mercantile principles is most immediate and invariable. They were, besides, the departments of the study to which Ricardo's See also:early training and practical habits led him to give special attention; and they have a lasting value See also:independent of his systematic construction. Ricardo's collected See also:works were published, with a notice of his life and writings, by J. R.

M'Culloch in 1846. The Principles have been edited (with an introduction, bibliography and notes) by E. C. K. Gonner, 1891. See also Letters to H. Trower and Others, ed. J. See also:

Bonar and J. H. Hollander, 1899; Letters to J. R.

M'Culloch, ed. J. H. Hollander, 1895; Letters to T. R. Malthus, ed. J. Bonar, 1887. A See also:

French See also:translation of the Principles by Constancio, with notes by Say, appeared in 1818; the whole works, translated by Constancio and Fonteyraud, form vol. xiii. (1847) of the Collection See also:des principaux economistes, where they are accompanied by the notes of Say, Malthus, See also:Sismondi, See also:Rossi, &c. The Principles was first " naturalized " in See also:Germany, says Roscher (though another version by Von Schmid had previously appeared), by See also:Edward Baumstark in his David Ricardo's Grundgesetze der Volkswirthschaft and der Besteuerung iibersetzt and erlautert (1837), which Roscher highly commends, not only for the excellence of the rendering, but for the value of the explanations and criticisms which are added.

End of Article: RICARDO, DAVID (1772-1823)

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