On the Principles of Political Economy and Taxation
|On the Principles of Political Economy and Taxation|
Title page from the first edition
On the Principles of Political Economy and Taxation (19 April 1817) is a book by David Ricardo on economics. The book concludes that land rent grows as population increases. It also clearly lays out the theory of comparative advantage, which shows that all nations can benefit from free trade, even if a nation lacks an absolute advantage in all sectors of its economy.
Ricardo claims in the preface that Turgot, Stuart, Adam Smith, Jean-Baptiste Say, Sismondi, and others had not written enough "satisfactory information" on the topics of rent, profit, and wages. Principles of Political Economy is ostensibly Ricardo's effort to fill that gap in the literature. Regardless of whether the book achieved that goal, it secured, according to Ronald Max Hartwell, Ricardo's position among the great classical economists Adam Smith, Thomas Robert Malthus, John Stuart Mill, and Karl Heinrich Marx.
In his book Adam's Fallacy: A Guide to Economic Theology, economist Duncan K. Foley highlights that in the Principles Ricardo criticizes Adam Smith's treatment of the theory of value and distribution for circular reasoning, in particular as far as concerns rent, and that Ricardo considers the labor theory of value, properly understood, a more logically sound basis for political economic reasoning. Foley briefly discusses also the chapter On Machinery, which Ricardo included in a revised version of the Principles and in which he discusses the impact of the adoption of machinery on the different classes of society, revising his earlier view that mechanization could be expected to be of benefit to each of the classes of the society. The increase in productivity due to mechanization lowers the production costs and thus also the real prices of commodities. Whereas the landowning class and capitalists benefit from the lower prices, workers in contrast do would not reap such benefit from the lower prices if capitalists reduce the wage fund in order to finance the expensive machinery, lowering employment among workers. In this case, Ricardo points out, wages are forced down by competition among workers, and the introduction of new machines can lead to an over-all decline in the well-being of the working class.
- See Ricardo, David (1817), On the Principles of Political Economy and Taxation (1 ed.), London: John Murray, retrieved 2012-12-07 via Google Books
- Duncan K. Foley: Adam's Fallacy: A Guide to Economic Theology, 2008
- On the Principles of Political Economy and Taxation, by David Ricardo. Complete, fully searchable text at the Library of Economics and Liberty.
- Ricardo on Value: the Three Chapter Ones. A presentation tracing the changes in the Principles' (University of Southampton).
- Biography of David Ricardo, at the Concise Encyclopedia of Economics
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