- Person
- David Ricardo
- Lived
- 1772–1823
- Field
- Economics and finance
- From
- British
The story
In the early nineteenth century new machines were spreading through British workshops and mills, and many workers believed that machinery threatened their livelihoods. David Ricardo, whose Principles of Political Economy and Taxation had appeared in 1817, had earlier taken a more optimistic view, but he kept thinking about the question.
The Principles sold well after an enthusiastic review by John Ramsay McCulloch in the Edinburgh Review in 1818, and a second edition followed in 1819. For the third edition, published in May 1821, Ricardo made extensive changes, especially to the opening chapter on value, and added an entirely new chapter, "On Machinery". Machinery was already on his mind: his chapter on value stated that the principle by which labour regulated value was considerably modified by the use of machinery and other durable capital.
In it he candidly declared that he had changed his mind. He wrote that he had become convinced that substituting machinery for human labour is often very injurious to the interests of labourers, and that their opinion was not founded on prejudice and error but was in line with the correct principles of political economy. He now accepted that introducing machinery could create unemployment and could even reduce the gross produce of a country while increasing its net produce, in which case some workers would be thrown out of work and the labouring classes would suffer.
McCulloch, who had become one of the most energetic promoters of Ricardo's ideas, was scandalised by the reversal. Ricardo, though, did not abandon his belief in progress or free trade. But he now insisted that the short-term costs to workers were real and deserved to be taken seriously.
The chapter has had a long afterlife. Economists continue to debate how new technology affects jobs and wages, and Ricardo's argument is now formulated in modern terms. His willingness to revise a published position in the light of better reasoning is often cited as a model of intellectual honesty.
Why it matters
Ricardo's willingness to take workers' concerns seriously, and to change his mind publicly, set an example of intellectual honesty that economists still discuss as automation reshapes work today.
About David Ricardo
Sephardic stockbroker’s son who made a fortune in the City, then founded classical economics, the theory of comparative advantage, rent and money behind the case for free trade.
More about David Ricardo
- David Ricardo called slavery a stain on BritainDavid Ricardo was an abolitionist. In March 1823 he told a meeting of the East India Company’s Court that he regarded slavery as a stain on the nation’s character.
- David Ricardo voted to end the death penalty for forgeryAs an MP, David Ricardo voted in 1821 to abolish the death penalty for forgery, backed criminal law reform and sought an inquiry into the Peterloo Massacre.
- David Ricardo proved that trade can benefit every nationIn his 1817 Principles, David Ricardo introduced comparative advantage, showing that two countries gain from trade even if one is better at producing everything.
- David Ricardo warned against issuing too much moneyIn 1810 David Ricardo published The High Price of Bullion, arguing that the Bank of England’s excessive note issue had caused banknotes to lose value.
- David Ricardo’s theory of rent inspired later reformersDavid Ricardo explained economic rent as the extra return from better land, an idea that inspired Henry George’s 1879 classic Progress and Poverty.
- David Ricardo campaigned against Britain’s Corn LawsDavid Ricardo argued that Britain’s Corn Laws made bread dearer and held back growth. After his death Parliament repealed them in 1846 and free trade became policy.
- David Ricardo backed reform of Parliament and the ballotDavid Ricardo used his seat in Parliament to support parliamentary reform and the secret ballot, speaking for reform at a Westminster dinner in 1822.
- David Ricardo proposed an independent central bankIn his Plan for the Establishment of a National Bank, published in 1824, David Ricardo argued that money should be issued by an independent public body.
Sources
- David Ricardo Wikipedia
- Ricardo, David (1772–1823) Carleton University
Another act of tikkun olam. This is part of tikkun olam, the Jewish idea of repairing the world, and every one of us can add to it.