Ricardo, David (1772–1823)

Abstract

Abstract David Ricardo is widely regarded as a founding figure in both classical economics and political economy alongside such figures as Adam Smith and Thomas Malthus. As a practicing financier on the London stock market, he brought his practical understanding of economics to basic problems in economic theory. Although his contributions to economics have often been criticized, his position as a founding father of the discipline is secure. A full-scale biography was published in 2013 and his collected works were edited by Piero Sraffa in 11 volumes (1951–73). Ricardo made important contributions to political debates in his time such as the corn trade. He made lasting contributions to both microeconomics and macroeconomics in the law of diminishing returns and to the labor theory of value; consequently, his work was much admired by Karl Marx. By recognizing that technological improvements could reduce the need for labor if not displace it, he anticipated what is now referred to as the de-skilling of labor. However, according to Paul Samuelson, Ricardo's major contribution was to the theory of comparative advantage, which says that, given international competition, an economy should specialize. Finally, Ricardo was a champion of free trade and the so-called laissez-faire economics. While Ricardo is highly regarded in economics, his contribution to the theory of social classes in his analysis of rent, profit, and wages has been neglected in sociology.