David Ricardo

When we are talking about the classic economics, especially political economics, the only one that we can never avoid is David Ricardo. Even though many of his ideas suit no longer today, much more are still proved to be fundamental and evoking.

From his family name, we can deduce more or less that he was not a native Anglo-Saxon. In fact, he was originated from Portugal. He was brought up in a huge family since 17 children were really a astonishing number. He received his education in the school in Holland and then joined his father or rather employed by his father in London Stock Exchange (which is deemed to be illegal today since David was only fourteen years old!!!). These experiences rendered him a great deal in his future achievement. When he was 21, he left his family for marriage and religious reason. Thanks to his social circle, he soon got a new business of his own which made him become wealthy. Afterwards, Mr. Ricardo started his hermit life while he thought had earned enough within his desire.

His interest in economics was triggered by Adam Smith's book "The Wealth of Nation" which led him into the research of this subject. His most acknowledged work is "Principles of Political Economy and Taxation" that contains two main sparkling ideas: a statement of labor theory of value and comparative advantage. The latter provides the basic theory support of current world's international trade. In his articulation of wage theory, he proclaimed the natural price is a trustable reference to the cost of production. Let's read a brief abstract from his words:

"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, provided by Wikipedia).