David Ricardo (1772-1823) was a British economist and one of the most influential figures in the history of economic thought.
He is best known for his work on international trade and the theory of comparative advantage.
Here are some key points about David Ricardo:
Theory of Comparative Advantage:
Ricardo's most famous contribution to economics is the theory of comparative advantage, which he developed in his book "Principles of Political Economy and Taxation" (1817).
This theory argues countries should specialize in producing goods in which they have a comparative advantage (the ability to produce a good at a lower opportunity cost) and trade with other nations.
This concept laid the foundation for modern international trade theory.
Labor Theory of Value:
Ricardo also worked on the labor theory of value, which suggests the value of a commodity is determined by the amount of labor required to produce it.
This theory had a significant impact on classical economics and influenced the works of other economists like Karl Marx.
[Own comment: Not true, the value of a commodity depends on the demand for that commodity. Commodities are less expensive now than before mainly because of use of modern machinery which requires less labor hours to produce a unit.]
Iron Law of Wages:
Ricardo proposed the "iron law of wages," which argued in the long run, real wages tend to settle at the minimum level necessary to sustain the labor force at a subsistence level.
[Own comment: Not true, the wage level of a person depends on how much value that person creates. Most workers today can read and write, are trained and educated, and use modern equipment and thereby are more productive and valuable, so they do not live at subsistence (just above starvation) level.]
This idea was controversial and led to debates among economists.
Theory of Rent:
Ricardo developed the theory of economic rent.
Economic rent is the surplus income or profit that accrues to a factor of production beyond what is necessary to maintain its supply.
This concept is an important part of classical economics.
Political Influence:
In addition to his economic contributions, David Ricardo was also a Member of Parliament in the United Kingdom, representing the interests of the financial community.
His ideas had an impact on economic policies of the time.
Classical Economics:
Ricardo was part of the classical school of economics, along with other notable economists like Adam Smith and John Stuart Mill.
Their ideas laid the groundwork for classical economic thought and were influential during the 19th century.
David Ricardo's work continues to be studied and discussed in the field of economics, and his theory of comparative advantage remains a fundamental concept in the understanding of international trade and globalization.
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