David Ricardo (1772–1823)
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Who They Were
David Ricardo (1772-1823) was a British political economist who, with almost no formal education past his teens, worked on the London Stock Exchange, made a large fortune trading government securities, and later bought a seat in Parliament. He came to economics through the practical controversies of his day: the bullion debate over paper money and prices during the Napoleonic wars drew him into monetary economics, and Britain's Corn Laws -- grain tariffs that made protection a live political question -- pushed him toward his theories of rent and trade. His On the Principles of Political Economy and Taxation (1817) followed Adam Smith and long preceded Keynes, giving the classical school its analytical spine. As much as his conclusions, his method -- stripping a problem to a small number of assumptions and reasoning deductively to a conclusion -- shaped how economics would be done.
Key Contributions
Ricardo's Principles set out the doctrine of comparative advantage: trade pays even when one country is better at making everything, illustrated by his famous cloth-and-wine example involving England and Portugal. He also advanced a labour-based theory of value and the theory of differential rent, which explains rent as arising from differences in land fertility rather than from any productive act by the landlord. Priority on rent is genuinely shared -- Ricardo, Malthus, Edward West and Robert Torrens all published on it in 1815 within weeks of one another. His deductive style, rather than Malthus's more empirical approach, became the template for economic theory. His labour theory of value was later inherited by Karl Marx, who used it to build his concept of surplus value.
On EconRecall
Classical economist behind comparative advantage, differential rent, and the deductive method of economic theory. Play the games that feature David Ricardo: