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Acadec: Economics
Ricardo
David (1772-1823)
1. He was born on April 18/19 in London, England to a family of Sephardic
Jews who had emigrated from the Netherlands to England.
2. At the age of 14, he entered into business with his father.
3. At the age of 21, however, he had broken with his father over religion,
become a Unitarian, and married a Quaker.
4. He continued as a member of the stock exchange, and did so well that he
acquired a fortune, which allowed him to pursue interests in literature and
science, particularly in the fields of mathematics, chemistry, and geology.
5. Ricardo's interest in economic questions arose when he read Adam
Smith's
Wealth of Nations.
6. For 10 years, he studied economic offhandedly, and later with greater
concentration.
7. His first published work was The High Price of Bullion, a Proof of
the
depreciation of Bank notes in 1810, an outgrowth of letters he had
published
in the Morning Chronicle the year before.
8. His book refueled the controversy surrounding the Bank of England:
freed
form the necessity of cash payment(strains from the wars with France prompted
the government to bar the Bank of England from paying its notes in gold) both
the Bank of England and the rural bank had increased their note issues and
the volume of their lending.
9. The directors of the Bank of England maintained that the subsequent
increase in prices and the depreciation of the pound had no relation to the
increase in bank credit.
10. However, Ricardo asserted that there was a link between the volume of
bank notes and the level of prices, and argued that the price levels inturn
affected foreign exchange rates and the inflow and outflow of gold.
11. The bank had to shape its lending policy according to general economic
conditions adn exercise control over the volume of money and credit.
12. A committee appointed by the House of Commons, known as the Bullion
Committee, confirmed Ricardo's views and recommended the repeal of the Bank
Restriction Act.
13. Ricardo began to acquire friends who influenced his further intellectual
development. One of them was the philosopher and economist James Mill, who
became his political and editorial counselor.
14. Another was the Utilitarian philosopher Jeremy Bentham.
15. Another was Thomas Malthus, best known for his theory that populatin
tends to increase faster than the food supply.
16. At the age of 42, he retired from business, and took up residence in
Glousestershire, whrere he had extensive land holdings.
17. He formulated the Iron Law of Wages, which stated that all attempts to
improve the ral income of workers were futile and that wages would remain ner
subsistence level.
18. One year after his retirement (1815), he published his Essay on the
Influence of a Low Price Corn on the Profits of Stock in which he argued
that
raising the tariff on grain imports tended to increase the rents of the
country gentlemen while decreasing the profits of manufacturers.
19. Later in Principles of Political Econmy and Taxtion (1817), which
became
his most famous work, Ricardo analyzed the laws determining the distribution
of everything that could be produced by the "three classes of the
community"--namely , hte landlords, the workers, and the owners of capital.
20. He concluded that profits vary inversely with wages, which rise or fall
in line with the cost of necessities. Also he determined that rent tends
to
increase as population grows, owing to higher costs of cultivating more for
the larger population.
21. He also concluded that trade between countries was influence by relative
costs of production and by differences in internal price structures that
could maximize the comparative advantages of the trading countries.
22. In 1819, he purchased a seat inthe House of Commons, and entered
Parliament as a member for Portarlington.
23. Although he was not a frequent speaker, his opinions on free trade were
received with respect.
24. In 1823, illness forced him to retire from Parliament. H died that
same
year at the age of 51. |
