Principles of Political Economy and Taxation

David Ricardo played a crucial role in developing Classical Economics. Ricardo was prompted to write on economics by reading The Wealth of Nations. As luck would have it, Ricardo knew James Mill (father of JS Mill) and was soon in contact with TR Malthus. The debates between Ricardo and Malthus produced a paradigm that lasted only a half a century. PPE+T is a central part of the Classical paradigm, it is Ricardo's definitive statement on economics. PPE+T is perhaps the most tightly reasoned book written by a Classical economists (JS Mill is a close rival here). This is not fun reading but it is important as a piece of history, and elements of Ricardo's analysis remain relevant today. Given Ricardo's razor sharp intellect, one must wonder why he did not develop modern value theory himself. The tight reasoning of this book is, ironically, the source of much criticism against it. Joseph Schumpeter (among others) has lamented `the Ricardian vice', by which Ricardo arrived at policy conclusions through flawless but restrictive logical reasoning. Ricardo is hard to argue against, given his assumptions, but what if we alter these assumptions? While Classical Economics is dead, some of its Ricardian elements live on. The Principles of Political Economy and Taxation remains relevant today largely because of Ricardo's concept of Comparative Advantage. Comparative Advantage is one of the most enduring ideas in economics. The development of the Comparative Advantage concept set Ricardo ahead of all but a few of his contemporaries. Economists still speak of Ricardian Equivalence and The Ricardo Effect. While some might object Ricardo's logical-deductive approach to political economy, few economists have stood the test of time so well. PPE+T is a timeless classic. This is not fun reading, but it is important none the less.

This work is a masterpiece of economic theory only second tothe Wealth of Nations by Adam Smith. Ricardo states that valueis a function of effort and not the price paid for labor. Hereminded us that labor plus the tools to assist labor affectedthe creation of value. Therefore; increases in value were indirect proportion to increments in labor. Value was also afunction of the time it took to bring the goods to market.Surprisingly, the cultivation of inferior land resulted in ahigher exchangeable value of raw produce because more laborwas required in its production. If we become more efficient inland cultivation, rents will go down because more can becultivated with less land. In addition, the exchangeable valueof commodities is undisturbed by natural or accidental causes.Laborers derive their greatest pleasure when the market priceof labor exceeds the natural price. Therefore; wages willincrease in response to increases in the demand for labor.Rises in rent are accompanied by increments in the share ofproduce because landlords want more rent when harvests aregreater. Accordingly, the price of corn is a function of the labor to produce it. If wages go down, then prices must fall.As the price of labor goes down, profits increase but theprice of the commodity may not go down. Taxes on profitstend to increase the price of a commodity . If money is nottaxed, then all commodities will be subject to price increases.Ultimately, a tax on land begets a tax on produce. In addition,a tax on labor will raise its price. In addition, the price of provisions determine the price paid to the worker. If moneydecreases in value, all commodities will be subject to steepprice increases. This was seen in modern times with thefluctuation of the Russian currency. Ultimately, bountylowers the price to foreigners because the government subsidizesthe bounty paid to the local merchants to stimulate trade.The theory of rent transfers value but does not create it.Ultimately, wages are determined by the price of food andcost of production.This theory of wages differs from Adam Smith who said thatwages were a function of the ease or hardship to do work, thedifficulty or expense of learning a trade, the constancyof employment, the trust reposed in the workmen, the probabilityof success or failure of the venture or the fear of misfortune.David Ricardo's work is an important milestone in the theoryof economics and comparison to the work of Adam Smith.

Along with Adam Smith, the Englishman David Ricardo is one of the fathers of the so-called Classics school of economic thought, and the Principles is his major opus, one he was very much reluctant to write, but only did so at the urgings of James Mill and his son John. Written in the first half of the 19th victorian century, he was nonetheless, a very freed mind, who did not accept or indulge in the extravagancies of the beginning of the industrialization proccess in England. To David Ricardo, Karl Marx owes a good share of his theory of labour, something essential in the labour movements of then. The concepts adapted and created by David Ricardo is transported to the text in a dry and concise style, not too much worried in polemics, but only interested in address the topics he raises in a very precise way. IF you are a student of Social Sciences, this book is a must.

Some authors you read, and perhaps think, "I wish I'd written that!" Ricardo, like Adam Smith and John Locke, are in another league altogether. The originality of mind is stunning. Smith, Mill, Malthus and J.B. Say are all more readable, which I fear sounds like a very poor recommendation for Ricardo! Still, I was so bowled over by the originality of his theoretical line, that I forgave much slow slogging through a difficult text. His theory of rent is I think quite misguided, but is so powerfully presented that I was hard put to think how I might argue against it were Ricardo to appear before me in person. I took this book about ten pages at a time, and found it well worth the trouble.

David Ricardo was an English economist who simplified and refined Adam Smith's theory of working capitalism outlined in "Wealth of Nations." The present book, "Principles of Political Economy and Taxation" written in 1817 was Ricardo's most important work. Ricardo strips away all of Adam Smith's assumptions that the owners of the means of production in society had any inherent right to profit from the labor of the working masses. Indeed, Ricardo laid out the conflict in modern capitalist society as clearly as anyone before or since his time. For Ricardo, the struggle in society was very plain. Capitalists made money off the surplus value created by workers, plain and simple. Therefore, capitalists needed to take as much of the surplus value as they possibly could with out any need for philosophical shilly-shallying. Capitalists need to recognise that their interests conflicted directly with the workers before it was too late. To increase profits capitalists should understand that they needed to reduce wages. Ricardo was elected to the pre-reform Parliament in 1819.