David Ricardo (1772-1823)
- The value
- The distribution
- The natural price of labor and the price list of work
- Explanation of the prevailing wage
- Explanation of gravitation: The market tends to pay the natural wages
David Ricardo was a prominent figure of his time. He participated in the great debates on the currency, the Corn Laws and so on. He associated with Smith and found numerous proposals that needed to be discussed. He published the 'Principles of Political Economy and Taxation' in 1817.
With this book, Ricardo appeared as the first truly modern economist because he combines theoretical economics and applied economics. Indeed, this book includes a theory on all the major concepts of the economy, such as production, consumption, distribution, pricing, value analysis and so on.
- Ricardo made the same distinction as Smith on two different notions of the value of goods
- He uses the theory of labor value propounded by Smith,
- At the same time he criticized the design of Smith's work, which is commissioned to measure the value of a commodity: "Sometimes he speaks of wheat, which now works as a yardstick"
- Therefore Ricardo discussed variations of the variables studied by Smith, such as wheat, silver and gold and the work ordered.
- For Ricardo, the work ordered cannot be a good yardstick, because it is not invariable. It is "subject to many variations as there are goods to which it is compared.
Ricardo's work included parameters that determine the value of a commodity or the quantity of labor needed to produce goods, and is the direct work (in the final act of production), or indirect work carried out in the period, which included the manufacture of the means of production used (in the original manufacture of instruments).
Indeed, by the term "Work", we not only mean the work of different qualities, but also the capital or labor employed in production of capital as labor. The decline in the amount of labor required to manufacture an object, or the capital employed in its production, involves lowering the relative value of the goods (that is to say relative to another).
If it was the standard wage, a decrease of the latter influences all the products in the same way, and the relative values of the objects do not change. Ricardo therefore focuses on production: the question of measuring the background, with that of the cause of value, or the basis of value (the cause being the additional quantities or less of work).The value is thus in the nature of a report (exchange ratio of goods).
It also takes into account the proportion of capital: This includes fixed capital and circulating capital which are useful in determining the relative worth of goods . The different proportions of fixed and circulating capital employed in the various branches of industry significantly alter the rule that applies in times when production does that work. The higher the ratio of fixed capital in a factory, the greater is the value of goods produced there. Under the influence of a pay rise, the value descends in relation to the goods created in factories where is more capital flowing.
Tags: David Ricardo, Principles of Political Economy and Taxation, Corn Laws
[...] (For as Ricardo said in the text, this is not the amount of money received by the worker that is important, but the amount of subsistence and other necessary or useful items that it can buy with that money). With respect to the natural wage, differences appear with Adam Smith. Firstly, the natural wage is not constant but varies according to the "customs", that is to say in terms of epochs and countries. On the other hand, it depends on the price of the goods he buys. [...]
[...] There is no exchange of work, and these owners would spend their income, while the capitalist who sees a drop in income would save less and thus experience a slowdown in capital accumulation. (By nature the investors are not pensioners, but capitalists). Ricardo had to find a way to stop this phenomenon, and ensure that the maximum share goes to the capitalists so that Britain is in a better position. To stop it, he recommended opening the English territory to wheat from U.S. In the U.S., there was free access to land at the time, and the wheat supply from the US therefore needed no rent. [...]
[...] THE NATURAL PRICE OF LABOR AND THE PRICE LIST OF WORK Explanation of the natural price of labor; price of labor and gravitation The natural price of labor tends to increase with the progress of society In this area, David Ricardo borrows Smith's analysis. An explanation of the natural wage or natural price of labor (determined outside the market) In the analysis of the natural wage by Ricardo also corresponds to the minimum of subsistence and the population size. This salary will allow the worker to obtain different goods such as consumer goods (the bulk of the supplies of agricultural origin and constitutes the majority of goods purchased), the basic necessities and property amenities. [...]