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Below is a painting of me at age 49, two years before my death. It was painted by Thomas Philips.

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My name is David Ricardo and I was born on the 19th of April, 1772, in London. I'm one of the most influential British political economists out of all the classical economists. I am best known for my theories on wages, profit, labor value, comparative advantage, and rents. I also discovered the law of diminishing marginal returns.

At the age of 14, I entered into business with my father, who had made a fortune on the London Stock Exchange.

By the time I was 21, I had a broken relationship with my father because of some disagreements over religion. I become a Unitarian, and married a Quaker wife called Priscilla Anne Wilkinson, who my father strongly disliked. As a result, he disowned me and my mother cut all contact with me.

Despite the estranged relationship with my father, I continued as a member of the stock exchange, where my talents and character won me the support of an eminent banking house. I did so well in just a few years that I obtained a large fortune, which allowed me to pursue interests in literature and science, particularly in the fields of mathematics, chemistry, and geology.

Later on, I discovered my passion for economics and was inspired by Adam Smith.

In the next 10 years, I made several publications regarding my opinion on the economic state and my future predictions. These publications not only influenced the public and gave them new perspectives on the economy, but it also gave me the chance to meet many people and make valuable friends. Among these friends, the most notable were the philosophers and economists, James Mill, Jeremey Bentham, and Thomas Malthus, who helped and enhanced my economic views.

At age 51, in 1823, illness forced me to retire from Parliament and I eventually died on September 11 at Gatcombe Park in Gloucestershire, England.

One of my most famous quotes:
"There can be no rise in value of labour without the fall of profits"

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The High Price of Bullion(1810)

My first piece of work that was published was The High Price of Bullion, a proof of the depreciation of bank notes.

It was published surrounding the controversy of the Bank Of England, which was about the necessity of cash payment. Strains from the wars with France prompted the government to bar the Bank of England from paying for its notes in gold.

During that time, The Bank of England increased their note issues and the volume of their lending. They clarified that the sudden increase in prices to the public and claimed that the depreciation of the pound had no correlation to the increase in bank credit.

However, I believed that there was in fact a link between the volume of bank notes and the level of prices. Moreover, I also argued that the price levels affected foreign exchange rates and the inflow and outflow of gold.

The controversy at that time was essential to the development of theories concerning central banking. In regards to my theory, a committee called House of Commons, known as the Bullion Committee, confirmed my views and gave credits to my work, which put a spotlight on me, making me popular among other economists.

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Influence of a Low Price of Corn on the Profits of Stock (1815)

In this publication, I described what came to be known as the law of diminishing marginal returns, one of the most famous laws of economics. It states that as more and more resources are combined in production with a fixed resource, we gain more from it, but at some point, adding an additional factor of production results in smaller increases in output.

Furthermore, I also opposed the protectionist Corn Laws, which restricted imports of wheat. When arguing for free trade, I formulated the idea of comparative costs, today called Comparative Advantage, a very subtle idea that is the main basis for most economists’ belief in free trade today.

The idea is as follows: a country that trades for products it can get at lower cost from another country is better off than if it had made the products at home.

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Principles of Political Economy and Taxation (1817)

I analyzed the laws determining the distribution of everything that could be produced by the “three classes of the community” in this publication.

As part of my theory of distribution, I concluded that profit differs inversely with wages, which rise or fall in line with the cost of necessities.

I also determined that rent tends to increase as population grows due to the higher costs of cultivating more food for the larger population.

Furthermore, I concluded that trade between countries was influenced by the costs of production and by the differences in internal price structures that could maximize the comparative advantage of the trading countries.

I believed that there was little change to unemployment as the population grew, but I kept my opinion that rapid population growth that could crush wages to a substantial level. This would thereby limit both profits and capital formation by extending the margin of cultivation.

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I define rent as: “that portion of the produce of the earth which is paid to the landlord for the use of the original and indestructible powers of the soil.”

In my theory, rent is nothing but the producer's surplus or differential gain. It is found in land only. (Further details can be viewed in Principles of Political Economy and Taxation section).

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A video regarding my ideas on the Comparative Advantage Theory.

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The Principle of Comparative Advantage - 60 Second Adventures in Economics (4/6)

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TELL US WHAT YOU THINK and help us improve our Free Educational Resources https://www.surveymonkey.com/r/2015_YouTube_descr For more like this subscribe to the Open University channel https://www.youtube.com/channel/UCXsH4hSV_kEdAOsupMMm4Qw Free learning from The Open University http://www.open.edu/openlearn/money-management/management/business-studies/competitive-advantage --- David Ricardo's famous economic model, predicts that if there are just two countries and two products both can be better off if they specialise and trade in the thing they're relatively best at.

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While studying economics, I refined and modified a theory by Karl Marx which states that the value of a product depends on the amount of labour required to produce it. For example, if one product requires twice as much labour to produce as another product, it would be twice as valuable. Adam Smith however, believed that this theory made value a function of wages and thus income distribution, which I believed was untenable.

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My interest in economics arose in 1799 when I read Adam Smith's "Wealth of Nations." I was inspired from the work of art that was his publication. It was what inspired me to start studying economics for the next 10 years.

As soon as I started to study economics, I began to acquire friends who influenced me and further developed my intellectual abilities.

One of these friends was the philosopher and economist James Mill, who became my political and editorial counselor.

Other friends included the philosophers: Jeremy Bentham, and Thomas Malthus. Thomas Malthus was best known for his theory that population tends to increase faster than the food supply, an idea that I have accepted and approved. Jeremy Bentham and Thomas Malthus were some of my clos
est friends I had during that time.

Adam Smith, the economist who inspired me to become an economist.

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I developed the classical theory of comparative advantage which explains why countries engage in international trade even when one country's workers are more efficient at producing every single good than workers in the other countries. I also published "Influence of a Low Price of Corn on the Profits of Stock" (1815) that focuses mainly on this theory.

For example, Italy can produce one bottle of wine using five hours of labor and one loaf of bread with ten hours of labor. Germany’s workers, on the other hand, can produce a bottle of wine with three hours of labor and a loaf of bread with one hour.

Italy’s cost of producing wine, although higher than Germany’s in terms of hours of labor, is lower in terms of bread.

For every bottle produced, Italy gives up half of a loaf, while Germany has to give up three loaves to make a bottle of wine. Therefore, Italy has a comparative advantage in producing wine. Similarly, for every loaf of bread produced, Italy gives up two bottles of wine, but Germany gives up only a third of a bottle. Therefore, Germany has a comparative advantage in producing bread.

If both countries exchange wine and bread one for one, Italy can specialize in producing wine and Germany can specialize in producing bread. They can then trade with each other. Both Italy and Germany will be better off than if they had not traded. This is a simple example of my theory of comparative trade.

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My most famous argument was about the values of goods. It started with an argument I had (through publications) with someone I admired, Adam Smith. It was a very memorable moment of my life. Although the argument was with someone I admire very much, I still believe I am right. I argued that the value of a good is measured by the average labor required to produce it, but Smith explained value as exchange value, meaning how much the product was worth and what you could trade it off for.

My Idea: Water has LESS value because it only takes pipes and the consumer to switch the tap on to get it, therefore it has low value.
Gold has HIGH value because it takes a lot of people to make the tools for getting the gold and the miners and the people who melt the gold, therefore making it high in value.

"Gold, on the contrary, though of little use compared with air or water, will exchange for a great quantity of other goods." (David Ricardo)

Smith on the other hand thinks differently

Smith's idea: Water has low value because you need a LOT of water to trade a LITTLE bit of gold.
On the other hand you can buy many things with very little gold, making gold have a high value.

Despite the clash of opinion on this matter, Smith and I still remained friends and he remained as someone I admire very much.

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The philosopher and economist who helped and counseled my economic ideas and work

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The Utilitarian English philosopher who helped me formulate my economic ideas and oversaw my publications.

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The theory of wages explains that the market price of labour will always tend towards the minimum required for subsistence. If the supply of labour increases, wages will fall, eventually causing a decrease in the labour supply. If wages rise above the subsistence level, population will increase until the larger labour force would force wages down again, creating a cycle.

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Hi Mr.Ricardo. I am Karl Marx. I agree with the theory: "the value of a product depends on the amount of labor required for it ." I also believe that this theory can explain the value of all commodities. I call this "Labor Power" I believe that "Labor power" is the worker’s ability to produce products and services. and the value of labor power is depended on the time spent. (His or her capacity to do work)

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Hello Mr.Ricardo,
Contrary to your belief that the value of a product derives from the amount of labor required for its production, it is my absolute viewpoint that the value of a product deprives from the utility it provides to its user. As the  purchase of a good is dictated by a consumer's income, a rational consumer will not purchase an additional unit of good unless the utility of the good is equal to or greater than that of the original good. Hence, the value of a product is determined from its marginal utility, instead of the amount of labor required for its production.
-J.B Say

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Hello Mr. Ricardo

I agree with some of your ideas, but I also have a slight suggestion for some of your ideas. I believe that prices and economic growth are a result of innovations of entrepreneurs. If an entrepreneur invent something new, it may replace old systems and in turn cause progress among society.

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“David Ricardo.” Ohio River - New World Encyclopedia, 12 Nov. 2017, www.newworldencyclopedia.org/entry/David_Ricardo.

“David Ricardo.” Wikipedia, Wikimedia Foundation, 5 Aug. 2018, en.wikipedia.org/wiki/David_Ricardo.

Fonseca, Gonçalo L. “David Ricardo.” The History of , www.hetwebsite.net/het/profiles/ricardo.htm.

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Hello Mr. Ricardo,

I am Alfred Marshall. I very much agree with your theory of comparative advantage and the example that you used. It relates very closely to the supply and demand theory, and the theories of production. Firms can maximize profits by make the production cost less than the cost of the output (product.) To give up one thing will have advantages and consequences.

- Alfred Marshall.

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Hello Mr. Ricardo,
I agree with your argument about value of goods. Similar to your example comparing water and gold, paper is cheap because woods are abundant and producing cost is low; diamond is expensive because it is scarce and it requires a lot of workforce and technology to mine it. Labor is a substitute for capital or money, and therefore the value of a good depends on how much labor is required.

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Hello, Mr Ricardo. I am Arthur Pigou. I am respect your idea about "labor power", but I think the market system is affected by both demand and supply, you have to the consumptions of demands, we can't determine the value of a product by "labor power", if there is something people really do need it, even the labor force is very low, it will be high value. Here are some suggestions.

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Hello Mr.Ricardo,
Since we are two economists who have worked every close to each other as great friends, it is not surprising that I fully acknowledge your theory of rent, which I regard is almost the direct consequence of my principle of population. The price of food generally goes up because due to increases in population. People who farm on more fertile land would have an increase in production and wage compared to those on the least profitable land who get just enough wage to make their work worthwhile, but because of competition wages and profits tend to be equal on different soils. A landlord whose tenant farmer is making a big profit will increase the rent and vise versa.

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Mr. Ricardo,  your theory of wages makes one mistake in its assumption -that the reduction of wages will not impact demand. The truth of the matter is that once wages are reduced, so is spending power, thus reducing as well the amount of currency in circulation -as people can buy less, the overall (aggregate) demand in society will fall, leading to the very situation that I aim to address and solve. What classical theory ignores is that it is very possible for demand in society (through a reduction of wages or otherwise) to become low enough for many to deem goods and services pointless to be produced, leading to stagnation. -J.M. Keynes

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Hello Mr. Ricardo,

I am glad to hear that I have inspired you to become an economist. I agree with many of your ideas regarding the Theory of Comparative Advantage and the Labour Theory of Value. However, I have noticed some differences in our ideas on the labor theories of value. Your labor theory is more about wages based on a money price (measurable), while mine is more about the toil and trouble saved (immeasurable value).