The Principles of Political Economy and Taxation (Dover Value Editions)

The Principles of Political Economy and Taxation (Dover Value Editions) | David Ricardo | Told the truth

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	The Principles of Political Economy and Taxation (Dover Value Editions) David Ricardo Dover Publications, 2004 - 320 pages average customer review:based on 8 reviews view larger image
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highly recommended

This landmark treatise of 1817 formulated the guiding principles behind the market economy. Author Ricardo, with Adam Smith, founded the classical system of political economy, a school of thought that dominated economic policies throughout the 19th century and figured prominently in the theories of John Stuart Mill and Karl Marx.

Principles of Political Economy and Taxation by Ricardo

This work is a masterpiece of economic theory only second to
the Wealth of Nations by Adam Smith. Ricardo states that value
is a function of effort and not the price paid for labor. He
reminded us that labor plus the tools to assist labor affected
the creation of value. Therefore; increases in value were in
direct proportion to increments in labor. Value was also a
function of the time it took to bring the goods to market.
Surprisingly, the cultivation of inferior land resulted in a

higher exchangeable value of raw produce because more labor
was required in its production. If we become more efficient in
land cultivation, rents will go down because more can be
cultivated with less land. In addition, the exchangeable value
of commodities is undisturbed by natural or accidental causes.
Laborers derive their greatest pleasure when the market price
of labor exceeds the natural price. Therefore; wages will
increase in response to increases in the demand for labor.
Rises in rent are accompanied by increments in the share of
produce because landlords want more rent when harvests are
greater. Accordingly, the price of corn is a function of the labor to produce it. If wages go down, then prices must fall.
As the price of labor goes down, profits increase but the
price of the commodity may not go down. Taxes on profits
tend to increase the price of a commodity . If money is not
taxed, then all commodities will be subject to price increases.
Ultimately, a tax on land begets a tax on produce. In addition,
a tax on labor will raise its price. In addition, the price of
provisions determine the price paid to the worker. If money
decreases in value, all commodities will be subject to steep
price increases. This was seen in modern times with the
fluctuation of the Russian currency. Ultimately, bounty
lowers the price to foreigners because the government subsidizes
the bounty paid to the local merchants to stimulate trade.
The theory of rent transfers value but does not create it.
Ultimately, wages are determined by the price of food and
cost of production.

This theory of wages differs from Adam Smith who said that
wages were a function of the ease or hardship to do work, the
difficulty or expense of learning a trade, the constancy
of employment, the trust reposed in the workmen, the probability
of success or failure of the venture or the fear of misfortune.
David Ricardo's work is an important milestone in the theory
of economics and comparison to the work of Adam Smith.

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Told the truth

David Ricardo was never one to mince words.
"The opinion entertained by the labouring class, that the employment of machinery in frequently detrimental to their interests, is not founded on prejudice and error, but is comfortable to the correct principles of political economy." Unlike today, the ruling class and their intellectuals of the 19th Century were not affraid to say what they were up to.

Redirecting Classical Economics

David Ricardo played a crucial role in developing Classical Economics. Ricardo was prompted to write on economics by reading The Wealth of Nations. As luck would have it, Ricardo knew James Mill (father of JS Mill) and was soon in contact with TR Malthus. The debates between Ricardo and Malthus produced a paradigm that lasted only a half a century. PPE+T is a central part of the Classical paradigm, it is Ricardo's definitive statement on economics.

PPE+T is perhaps the most tightly reasoned book written by a Classical economists (JS Mill is a close rival here). This is not fun reading but it is important as a piece of history, and elements of Ricardo's analysis remain relevant today. Given Ricardo's razor sharp intellect, one must wonder why he did not develop modern value theory himself. The tight reasoning of this book is, ironically, the source of much criticism against it. Joseph Schumpeter (among others) has lamented `the Ricardian vice', by which Ricardo arrived at policy conclusions through flawless but restrictive logical reasoning. Ricardo is hard to argue against, given his assumptions, but what if we alter these assumptions?

While Classical Economics is dead, some of its Ricardian elements live on. The Principles of Political Economy and Taxation remains relevant today largely because of Ricardo's concept of Comparative Advantage. Comparative Advantage is one of the most enduring ideas in economics. The development of the Comparative Advantage concept set Ricardo ahead of all but a few of his contemporaries. Economists still speak of Ricardian Equivalence and The Ricardo Effect. While some might object Ricardo's logical-deductive approach to political economy, few economists have stood the test of time so well. PPE+T is a timeless classic. This is not fun reading, but it is important none the less.

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Is it over yet?

I don't want to insult Ricardo. He was unequivocally brilliant. But this book was painful to read. Granted, I am not an economist, so maybe this just wasn't for me. I found it dry and devoid of all emotion. I understand that it is intended to educate and to promote an economic theory, not to entertain, but God man, show your readers some mercy! I am a firm believer that if a book is too boring to read, the author's message will never get out, regardless of its merits.

reviews: page 1, 2

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