David Ricardo. Basic ideas and views

David Ricardo is one of the most interesting figures among the thinkers of economic theory of the past. As we know, theory and practice are usually separated by a gulf, and many economists who were successful in theory were not so successful in their lives. David Ricardo became the author of the most interesting and discussed theories in the field of economics. In addition, he was a rich man and a successful businessman.

Who should you listen to - a dry theorist or someone who has learned how to make money this way?

Without education, but with a fortune

An economist with a capital E, David Ricardo was born into a Jewish family in 1772. Like many similar families, they lived first in Holland and then in England. It was difficult for Jewish emigrants of those times, so David left his studies at the age of 14 and joined his father to earn money.

They traded on the stock exchange, where David's quick mind very soon delved into all the nuances of the matter. Having a bright entrepreneurial spirit, after a couple of years he could already replace his father in all matters. And by the age of 26, the future economist becomes a millionaire. Moreover, after 12 years he became so rich that he stopped carrying out transactions on the stock exchange for the reason that he simply did not need to continue earning money. Stunning success in entrepreneurship and a logical mindset are the combinations that are so necessary for writing effective works for economic science.

The most famous teachings of David Ricardo

After making money became a secondary issue, D. Ricardo was able to devote his mind entirely to economic ideas. Although his work began at the age of 37, after becoming acquainted with the works of the no less famous Adam Smith. Ricardo is known as a follower of Smith and, oddly enough, his opponent.

He is considered the founder of the discipline of political economy. In this regard, a very famous work, authored by David Ricardo, is mentioned - “Principles of Political Economy and Taxation.” In addition to other ideas, of which Ricardo had a great many, the theory of comparative advantage is considered interesting and relevant. It has found wide application in globalization and foreign trade.

"Ricardian vice" and "dismal science"

His works are not entirely easy to understand due to the excess of mathematical calculations. In economics, it is known as the “Ricardian vice,” which refers to theories that are inaccessible to many and full of complex mathematics. If we remember that Ricardo did not have a higher education, this fact is surprising.

In addition, David Ricardo is an economist who survived the economic crisis, and this left a mark on his writings. Although he was inspired by the work of Adam Smith, his views of the world differed significantly, and his view of economics was nicknamed "the dismal science" by Carlyle.

Absolute Advantage Theory

David Ricardo's theory speaks of natural freedom for the exchange of goods between states in the sense that it is beneficial for each country to export what is natural and favorable for it to produce.

It is customary to consider two types of benefits:

• natural: soil, natural reserves, climate, geographical location of the country, etc.;
• artificial: the special skill of the country's workers in the production of specific goods, for example, the ability of the inhabitants of Cuba to produce Cuban cigars.

These are absolute advantages, but as Ricardo showed, comparative advantages matter much more.

Theory of comparative advantage

Thus, Ricardo believed that it is not at all necessary for one country to have an absolute advantage in some product over another country. That is, have labor costs per unit of goods lower than those of another country. But it is useful to consider comparative advantage. This means that it is quite acceptable for some of the goods that a country produces to perform better than others when comparing them to another country's performance.

David Ricardo showed that in trade exchanges between countries, all participants who have comparative advantages in different export goods will cooperate mutually to their advantage. This can be called the international distribution of labor, in which even countries that do not have special advantages in some goods benefit. This is how David Ricardo briefly and accurately described international exchange.

David Ricardo's theory of comparative advantage is not just taught to economists, but is the basis of such a process as globalization. More understandable and relevant than Ricardo's other theories, it has retained its significance for the field of foreign trade to this day.

Example on the theory of comparative advantage

David Ricardo's theory of comparative advantage, unlike his other works, is not difficult to understand. For clarity, let’s take examples with well-known countries and goods, immediately stipulating the nuance that the data in the examples is taken arbitrarily.

An example can be used of two countries, Brazil and India, which can only produce 2 goods, such as coffee and cloth. This simplification, although very exaggerated, is more clear for understanding the essence of the theory of comparative advantage.

The production of these goods must be distributed and all the country's resources directed towards them. So, each country has 100 man-hours at its disposal, which must be used to produce coffee and fabric, distributed in the best possible way. So, the possibilities for each country are:

• Brazil produces 200 kg of coffee in 10 hours and 50 meters of fabric in 10 hours;
• India produces 100 kg of coffee in 10 hours and 100 meters of fabric in 10 hours.

It is obvious that the production capabilities of these two countries for the same goods differ significantly. The reason for this may be the natural advantages already described, such as the best growing of coffee in Brazil and cotton in India. And also artificial advantages, such as the skills of Brazilian and Indian workers in different fields.

To understand how countries might allocate capacity, two different production options are available:

• production in a closed economy;
• production in conditions of foreign trade.

Option 1. No trade relations

In the first option, there is a condition that the countries do not have trade relations. It is clear that in this case both countries are forced to produce two types of goods. If we talk about an arbitrary distribution of 100 man-hours, then the following option is possible:

• Brazil will produce 1200 kg of coffee and 200 meters of fabric.
• India will produce 400 kg of coffee and 600 meters of fabric.
• The total volume of goods is 1600 kg of coffee and 800 meters of fabric.

The calculations show that Brazil has an advantage in coffee production, and India has an advantage in textiles. By allocating resources arbitrarily, countries waste volume by directing man-hours to less efficient production.

Option 2. Foreign trade and mutually beneficial exchange

What will happen if each country concentrates all its efforts on the production of what is clearly its strong point? Then the result will be as follows:

• Brazil will produce 2000 coffees.
• India will produce 1000 meters of fabric.

The total volume of goods in the second case is much higher than in the first, which means that the overall production efficiency is higher. Much larger volumes can be produced at low cost, which, given foreign trade, is beneficial for the economies of both countries.

The missing goods can be bought from another country, which also produces this product efficiently and sells it accordingly at a favorable price. You can exchange coffee for fabric, etc.

David Ricardo's Theory of Value

David Ricardo became the author of many theories, ideas and provisions that are interesting to economists. His view on the value of goods is interesting, where he denies any duality in its assessment. Thus, he argued that the value of a commodity, or the quantity of the commodity for which it is exchanged, depends on the relative rate of labor expended on it. The author leans towards the labor theory of value, saying that it does not depend on the amount of payment for this work. This view is typical of most thinkers in the field of classical political economy.

As a follower of Adam Smith, Ricardo uses the concepts of value and price as synonyms. Ricardo also expressed a very logical concept that the prices of goods and living labor also depend on materialized labor, namely, on the labor spent on machines, buildings, tools, etc.

Controversial theses of David Ricardo

Some of the provisions set out by the economist are considered controversial. The relative cost of goods does not depend in any way on fluctuations in the level of wages of the workers who produce them, as David Ricardo believed. This author's work also suggests that he did not accept the possibility of increasing wages without reducing profitability. Many economists argue with these opinions, and it should be fairly noted that the opinions voiced by Ricardo have many exceptions to the rules. Frankly speaking, any of the theories has this property.

Wage theory

Ricardo described two definitions of the price of labor:

• the natural price of labor is the opportunity for a worker to eat, purchase basic necessities and support his family for his labor;
• market price of labor - develops as a result of the relationship between supply and demand in the labor market.

Some economists have nicknamed his teachings “the dismal science,” which is true of some of the works that David Ricardo wrote. Ricardo's economy provided for ever-increasing supply in the labor market and ever-decreasing wages. But there is one caveat to this assumption that this wage trend is only valid for free competition in the market and non-interference by the state in wage levels.

Ricardo also noted that a change in wages with constant productivity does not change prices, but redistributes the cost of goods between the entrepreneur and the worker. This means that the ratio of wages and profits in the price of the product changes.

Other theories and theses of David Ricardo

• theories of reproduction;
• theories of money;
• theories of capital;
• theory of rent.

His opinion on rent is extremely interesting, which can be briefly stated as follows: “Bread is expensive not because rent is paid, but because rent is paid because bread is expensive.” This indicates that it is not rent that determines the price of a commodity, but the excess in the value of a commodity that determines rent. Other rent-generating factors that Ricardo considers: different natural potential of the plots and different distances from them to the goods market. Essentially, Ricardo's theory of rent is a particular version of the theory of marginal values ​​on which microeconomic analysis is based.

Ricardo is extremely interesting from the point of view that, in addition to economic ideas, he was able to leave a considerable legacy to his descendants. This suggests that he knew some market principles and used them effectively.

The third stage in the evolution of classical political economy. The teachings of D. Ricardo, T. Malthus, J.B. Seya.

Among the adherents of A. Smith's teachings in the post-manufacturing period, i.e. in the first half of the 19th century, in the history of economic thought the names of D. Ricardo, J.B. Say, T. Malthus, N. Senior, F. Bastiat and some other economists are primarily mentioned. Their work bears the imprint of the “new” time, which has shown that economic science should once again begin to comprehend what has been achieved in the “Wealth of Nations” in many economic categories and theories.

David Ricardo (1772-1823)- one of the brightest personalities of classical political economy of England, a follower and at the same time an active opponent of certain theoretical provisions of the legacy of the great A. Smith. D. Ricardo (1772-1823), unlike Smith, was an economist not of the manufacturing period, but of the era of the industrial revolution. Accordingly, his theoretical views reflected the changed economic situation. He was from a Spanish-Dutch Jewish family who came to England. Born in London, the third of 17 children of a stockbroker. He did not have to study at college or university, since under the influence of his father, from childhood he began to comprehend the basics of commerce, helping him in trading and stock exchange operations. But by the age of 16, D. Ricardo, although he did not have a systematic education, could independently cope with many of his father’s business assignments at the stock exchange and in the office. Marriage at the age of 21 without the blessing of his parents could result in difficult experiences of poverty for D. Ricardo. After all, upon marriage, he renounced his religion and, expelled by his father, broke with his family, having only 800 pounds sterling. D. Ricardo could only count on luck from his acquired profession as a stockbroker. However, 5-6 years later, when he already had three children (there were eight of them in total), his natural abilities and talent helped him succeed in stock exchange operations without the care of his father and achieve sufficient financial well-being to allow himself to even combine the activities of a businessman with the study of the once unknown to the proper extent of mathematics, natural science and other sciences. After 12 years, D. Ricardo quit his job as a stockbroker, laying the foundation for his millions, which, according to some estimates, amounted to 40 million francs. By the age of 38, D. Ricardo had become a major financial figure, the owner of his own house in an aristocratic quarter of London and a personal country residence.

Ricardo as a scientist, judging by the works he wrote and especially the main one of them - the book “Principles of Political Economy and Taxation” (1817), is distinguished by skillful polemics and high principles of scientific ethics, worthy of respect in our time. Speaking about the biography of D. Ricardo, it should also be noted that 4 years before his death, he left his first, which was considered the main, occupation in business. He made this decision not so much in order, using his fairly decent material and financial position, to continue further scientific research in the field of economic theory, from which he, in principle, did not distance himself, but rather out of a desire to bring his own economic ideas to life at the state level . It was for this purpose that in 1819, D. Ricardo, having made the “monetary expenses” necessary at that time, achieved his election as a member of the House of Commons of the English Parliament from one of the electoral districts of Ireland. Without officially joining any parliamentary faction, D. Ricardo maintained an independent position on all problems. In parliamentary speeches, he strongly advocated the abolition of the Corn Laws, supported demands for liberalization of the economy, freedom of trade and the press, avoidance of restrictions on the right of assembly, etc. Finally, another important milestone in the biography of D. Ricardo is, apparently, the event of 1821. , in which it was he, as evidenced by researchers of the creative path of this scientist, who founded the first political economy club in England.

Subject of study. Already in the preface of his famous work “Principles of Political Economy...” D. Ricardo, based on Smith’s division of society into three main classes (landowners, capitalists, workers), and income accordingly into rent, profit and wages, formulated the “main task political economy". It, he said, is to “define the laws that govern this distribution (of income).” Thus, he showed that he, like A. Smith, is primarily interested in inevitable economic “laws”, the knowledge of which will make it possible to control the distribution of income created in the sphere of material production. If the mercantilists and physiocrats considered trade and agriculture as their subject, Smith considered the entire economy, Ricardo points out that economic theory deals not with the proportions themselves, but with the relationships between people in the production process.

Study method. Similar to A. Smith’s concept of the natural order for increasing the country’s wealth, considered as the corresponding value of the physical volume of production, D. Ricardo considers free competition and other principles of the policy of economic liberalism to be the main condition for economic development.

Theory of value. David Ricardo built his economic theory on the basis of the law of value and explained each economic category based on it. D. Ricardo devoted the very first chapter of his “Principles” to the theory of value. At the same time, denying Smith’s dual assessment of this category, he categorically insists that only one factor, “labor,” underlies value. According to his formulation, “the value of a commodity, or the quantity of any other commodity for which it is exchanged, depends on the relative quantity of labor which is necessary for its production, and not on the greater or lesser remuneration which is paid for that labour.” Ricardo defined the concept of socially necessary labor costs. However, its interpretation is very unique: the cost of goods (socially necessary labor costs) is the labor costs under the worst production conditions.

Ricardo first analyzes labor relations from the perspective of the labor theory of value:

Introduces the concept of simple and complex labor, and any complex labor is the product of simple labor by the complexity coefficient, i.e. any complex work can be reduced to simple.

The cost of goods is determined by labor costs, but outside of the individual labor of each producer, and what is socially necessary, i.e. costs that exist in society on average at a given time for the production of a given product.

Labor of the same value in different production creates the same value in the same time, unlike Smith, Ricardo believes that value is determined by labor costs in capitalist production.

Theory of money. The author of the Principia wrote that “neither gold nor any other commodity can always serve as a perfect measure of value for all things.” In addition, D. Ricardo was a supporter of the quantity theory of money, linking the change in their value as goods with their (money) quantity in circulation. Ricardo determined the value of money (purchasing power) in inverse proportion to its quantity. The more money in circulation, the lower its value. He also believed that "money serves as the universal medium of exchange among all civilized countries and is distributed among them in proportions which vary with every improvement in commerce and machinery, with every increase in the difficulty of obtaining food and other necessaries of life for a growing population." Finally, by. his thoughts, money as goods, with a decrease in their value, necessitates an increase in wages, which in turn “... is invariably accompanied by an increase in the price of goods.”

Theory of capital. In D. Ricardo’s theory of capital, first of all, attention is drawn to the proposition that the decline in the level of exchange value of goods is directly dependent on the growing use of fixed capital in their production and the conviction that “the larger the share of fixed capital, the greater will be the decline.” . As for the essence of the category “capital,” the author of “Principles” characterizes it as “part of the wealth of the country, which is used in production and consists of food, clothing, tools, raw materials, machines, etc., necessary to set labor in motion.” "

Income theory. Following Smith, Ricardo divides society into three classes: entrepreneurs, wage workers, landowners, and each receives their own type of income. D. Ricardo's theory of income significantly enriched classical political economy in terms of characterizing the essence of rent, profit and wages. Thus, D. Ricardo’s concept of rent remains relevant even in our time. Its main ideas are that rent is always paid for the use of land, since its quantity is not unlimited, its quality is not the same, and with population growth, new plots of land begin to be cultivated, worse in quality and location, the cost of labor on which determines the cost agricultural products. Rent from the position of the labor theory of value divides all land into better and worse plots based on fertility and location. Pricing on the land market is based on the worst areas, because... the amount of land is limited, and the demand for agricultural products is consistently high. As a result, the owners receive a stable profit. Economic profit is called differential rent. The rent-generating factors he named are also convincing: the unequal natural potential of the plots (fertility) and the different distances of these plots from the markets where the marketable products obtained from them can be sold. Salary - seems to be the existence of a difference between the cost of a product and the cost of labor for its production. The first is always greater. I couldn't explain it. The problem of equivalent exchange was not solved. As for the quantitative determination of wages, following Smith, he believes that it is equal to the amount of money necessary to maintain a normal standard of living for the worker and his family. The specific salary depends on the situation with supply and demand in the labor market. Fluctuates around the above salary level. Characterizing the “natural price of labor” as the worker’s ability to support himself and his family for his labor, paying for food, essential necessities and conveniences, and the “market price of labor” as a payment that takes into account the real relationship between supply and demand for labor, D. Ricardo made a very dubious forecast regarding the future level of wages in society in connection with population rates. He wrote: “In the natural movement of society, wages tend to fall, as they are regulated by supply and demand, because the supply of laborers will continually increase to the same extent, while the demand for them will increase more slowly.” Profit is part of the cost and its source is the labor of hired workers. Quantified as the cost of goods minus wages. But problems arise. He could not explain the contradiction between what is equivalent in exchange and, according to the law of value, a clear violation of this rule when hiring workers. During the analysis, a second contradiction arose that could not be resolved: based on the law of value, the amount of profit of an entrepreneur should determine the amount of labor costs, but practice shows that the amount of profit is directly proportional to the costs of all capital, and not just labor. Ricardo viewed profit as the excess value created by a worker's labor over and above wages. Here he approaches the concept of surplus value, but never formulates it. In this connection, a contradiction arises: by selling his labor, the worker receives its full value and there is no place for profit. As in the case of wages, in conditions of free competition, according to D. Ricardo, “profits have a natural tendency to fall, because with the progress of society and wealth, the required additional amount of food is obtained by spending more and more labor.” Ricardo explained the tendency of the rate of profit to decrease in a very unique way, by the law of diminishing returns. The meaning of the law is as follows: with the development of the economy, there is a transition to the cultivation of lands with increasingly poor fertility, returns in relation to costs fall, prices rise, land rent rises, and the amount of profit falls.

Reproduction theory. Studying the patterns of economic development of a society in which the principles of unlimited free competition of entrepreneurs and freedom of trade prevail, D. Ricardo, perhaps, did not foresee that in the conditions of economic liberalism (and this was confirmed by the practical experience of world civilization) tendencies limiting them and, as a consequence, crises are inevitable discrepancies between produced commercial products and services and the effective demand for these goods and services, i.e. so-called crises of overproduction (or, according to another interpretation, crises of underconsumption). A similar crisis first occurred in 1825 in the scientist’s homeland two years after his death.

English stockbroker, economist, classic of political economy.

Young David Ricardo married a Christian and therefore was forced to leave his parents’ home, where they considered such an act impossible for a Jew...

Being an experienced stock player, David Ricardo refused to take part in stock exchange transactions, which, in his opinion, could lead to the misappropriation of public funds...

“...a young Scot appeared in London James Mill, an incisive essayist and writer on socio-economic issues. Ricardo met him, the acquaintance soon turned into a close friendship, which bound them until Ricardo’s death. In the early years, Mill played the role of mentor. He introduced Ricardo to the circle of scientists and writers, pushing him to publish his first works. Later the roles in a certain sense changed. After the publication of his main works, Ricardo Mill declared himself his student and follower . True, in his works he did not develop the strongest aspects of Ricardo’s teachings and did not defend it from critics in the best way. Nevertheless, Mill cannot fail to be remembered here with a kind word: a sincere admirer of Ricardo’s talent, he constantly pressed him, demanding that he write, remake, and publish. Sometimes Mill took on a slightly comic role, asking Ricardo “lessons” and demanding reports. In October 1815, he writes to Ricardo: “I hope you are now in a position to tell me something about how far you have progressed in your book. I now consider this work to be your definite vow.”

In 1817 David Ricardo wrote his main work: Principles of Political Economy and Taxation.

Having accumulated money, in 1819 David Ricardo year left stock trading and began to engage in self-education. He studied: mathematics, physics (set up his own laboratory), chemistry, geology, mineralogy (collected a rich collection of minerals), theology and literature.

Interesting effect of friendship David Ricciardo And Thomas Malthus:

Anikin A.V., The youth of science: the life and ideas of economic thinkers before Marx, M., Politizdat, 1979, p. 214-215.

David Ricardo- a follower and at the same time a critic of economic ideas Adam Smith. In turn, a number of David Ricardo’s ideas influenced his creativity

The contribution to the development of financial science by the English economist, classic of political economy, follower and opponent of Adam Smith is briefly outlined in this article.

David Ricardo main ideas briefly

In 1815, he wrote his first short pamphlet, “An Essay on the Influence of the Low Price of Corn on the Profits of Capital,” which was a huge success in English public circles. This is where his journey as an economist began.

In 1817, Ricardo wrote his best work, “Principles of Political Economy and Taxation.” In it he expressed his understanding of the problems of economic theory. Economics absorbed him so much that in 1821 the scientist created the first school of classical economics in England. And David Ricardo, as the leader of the English classical school, was engaged in theoretical developments, creating the following economic theories:

• Theory of value

The quantity and quality of labor determines the relativity of prices for goods. He distinguished between “natural” and “market” prices. Ricardo believed that prices for industrial products depend on supply conditions, and prices for agricultural products depend on the scale of production and the nature of demand. Also, when the value of money decreases, wages rise, along with the price of goods.

• Capital theory

Capital is part of the wealth of a country and consists of clothing, food, tools, machinery, raw materials and so on. He proved that inequality of profit, which is invested in capital, contributes to the movement of a person from one occupation to another.

• Rent theory

Rent is a payment for the use of land, since its quantity is not unlimited, and its quality is not the same, then as the population grows, more and more new plots of land are cultivated, slightly worse in location and quality. Therefore, the labor costs for its processing determine the value of the agricultural product. Land, according to the scientist, is a physical resource, not an economic one.

• Wage theory

David Ricardo's contribution to the economy is that the price for labor is based on the ratio of supply of labor and real demand. He is responsible for long-term forecasting of wages taking into account population rates. Wages depend on the price of necessities of life.

• Profit theory

With the progress of wealth and society, which requires greater expenditure of food and more labor, profits may fall. It may pause at certain intervals.

• Theory of money

This theory was developed on the basis of the existing system of monometallism: the amount of gold that is minted can be freely and guaranteed exchanged for paper money. Ricardo is a proponent of the quantity theory of money, according to which its value changes in the amount of money in circulation.

• Reproduction theory

Unrestricted free competition of entrepreneurs and freedom of trade are the principles of law. And it, in turn, determines the production of goods and services.

We hope that from this article you learned what economic views of David Ricardo made him a prominent figure in the financial world.

David Ricardo (eng. David Ricardo, April 18, 1772 (17720418), London - September 11, 1823, Gatcom Park) - English economist, classic of political economy, follower and at the same time opponent of Adam Smith, revealed a natural tendency in conditions of free competition in the rate of profit to reduction, developed a complete theory about the forms of land rent.

Argued that the value of products is determined by the amount of labor required to produce them, and developed a theory of distribution that explains how this value is divided among different classes of society.

He was from a Portuguese-Jewish family that emigrated to England from Holland just before his birth. He was the third of seventeen children of a stockbroker.

He studied in Holland until the age of 14, and at the age of 14 he joined his father at the London Stock Exchange, where he began to learn the basics of commerce, helping him in trading and stock exchange operations. By the age of 16, Ricardo could independently cope with many of his father’s orders at the stock exchange.

At the age of 21, Ricardo, having abandoned traditional Judaism, married Abigail Delwall, who professed the Quaker religion. His father expelled him, and his mother has never spoken to him since then.

Thus, Ricardo lost family support, but by this time he had already saved up about 800 pounds, which at that time was the salary of a laborer for 20 years or about 50 thousand pounds in 2005, and gained enough experience in stock exchange transactions to provide for himself and his young wife without support from parents.

After 5-6 years, he succeeded in stock trading, earned his first millions, and after 12 years he quit his job as a stockbroker. By the age of 38 he had become a major financial figure.

In 1799, he began to become interested in economics after reading Adam Smith's book The Wealth of Nations. At the age of 37 he wrote his first economic note.

Ricardo’s main work is traditionally considered to be the book “Principles of Political Economy and Taxation,” written by him in 1817.

In 1819, he retired from business to engage in scientific research in the field of economic theory. Became a member of the House of Commons of the English Parliament from one of the electoral circles in Ireland. He advocated the abolition of the “Corn Laws”, supported demands for economic liberalization, free trade, etc.

In 1821, David Ricardo founded the first political economy club in England. Died aged 51 in Gloucestershire from an ear infection.

He was an adherent of the concept of economic liberalism, which does not allow any government intervention in the economy and assumes free enterprise and free trade.

— Key points of economic theory according to Ricardo.
1. There are three main classes and three types of income corresponding to them:
* land owners - rent;
* owners of money and capital necessary to cultivate this land - profit;
* workers cultivating this land - wages.
2. The main task of political economy is to determine the laws governing the distribution of income.
3. The state should not interfere in production, exchange, or distribution. State policy should be based on economic principles, and the main way of interaction between the state and the population comes down to taxation. But taxes should not be high, because if a significant part of the capital is withdrawn from circulation, the result is poverty for the majority of the population, since the only source of growth in the nation’s wealth is accumulation. “The best tax is the least tax.” An increase in the income of capitalists necessarily leads to a decrease in the income of workers, and vice versa.
He was an adherent of the labor theory of value.

— Theory of value
* Exchange value depends not only on the quantity and quality of labor, but also on the rarity of the product.
* Speaking about natural and market prices, Ricardo wrote: “But if we take labor as the basis of the value of goods, it does not follow from this that we deny accidental and temporary deviations of the actual or market price of goods from their primary and natural price.”
* Along with the living labor expended, the price level of goods is also influenced by materialized labor, that is, “labor spent on tools, tools and buildings that facilitate this labor.”
* The relative cost of goods does not depend on changes in the level of wages of workers, only the ratio between wages and profit in the cost of the product changes.
* An increase in the cost of labor (wages) is impossible without a corresponding drop in profits.
* Money as a commodity, when its value decreases, necessitates an increase in wages, which, in turn, will lead to an increase in prices for goods.
* Money, as the universal medium of exchange among all civilized countries, "is distributed among them in proportions which vary with every improvement in commerce and machinery, with every increase in the difficulty of obtaining food and other necessities of life for a growing population."
* The level of exchange value of goods is inversely proportional to the use of fixed capital in their production, that is, as fixed capital increases, the exchange value will fall.

— Theory of capital
* “That part of the wealth of the country which is used in production and consists of food, clothing, tools, raw materials, machinery, etc., is necessary to set labor in motion”;
* due to the inequality of return on invested capital, the latter “moves from one occupation to another.”

— Theory of rent
* Rent is always paid for the use of land, since its quantity is not unlimited, its quality is not the same, and with population growth, new plots of land begin to be cultivated, worse in quality and location, the cost of labor on which determines the cost of agricultural products.
* Rent-generating factors are the fertility of the land (unequal natural potential) and the different distances of the plots from the markets where the marketable products obtained from them can be sold.
* The source of rent is not the special bounty of nature, but the labor applied.

— Wage Theory
Labor has natural and market value:
* “natural price of labor” - the ability of a worker to support himself and his family for his labor, paying for food, basic necessities and amenities. Depends on morals and customs, since in some countries, say, warm clothing is not required;
* “market price of labor” is a payment that takes into account the real relationship between supply and demand.

Many historians suggest that Ricardo's views on wages were influenced by the views of his friend Thomas Malthus.

Ricardo predicted that as wages rose, workers would start having more children, and eventually wages would fall because the number of workers would increase faster than the demand for their labor.

Unemployment is impossible in a market economy because the surplus population dies out. This is the essence of the Ricardian “iron” law of wages.

— Theory of money
Ricardo's positions on the theory of money were based on provisions characteristic of the form of the gold coin standard. Moreover, “neither gold nor any other commodity can always serve as a perfect measure of value for all things.” Ricardo was a proponent of the quantity theory of money.

— Theory of reproduction
Ricardo recognized the “law of markets” of Jean Baptiste Say: “Products are always purchased for products or services; money serves only as the measure by which this exchange is accomplished. A commodity may be overproduced, and the market will be so crowded that even the capital spent on that commodity will not be recovered. But this cannot happen to all products at the same time.”

— Theory of comparative advantage
Ricardo proved that specialization in production is beneficial even to a country that has no absolute advantage, provided that it has a comparative advantage in the production of a good. Each country should specialize in the production of a product that has maximum comparative efficiency.

Ricardo discovered the law of comparative advantage, according to which each country specializes in the production of those goods for which its labor costs are comparatively lower, although in absolute terms they may sometimes be slightly higher than abroad.

He gives the now classic example of an exchange of English cloth for Portuguese wine, which results in both countries benefiting even though the absolute costs of producing cloth and wine are lower in Portugal than in England.

The author completely abstracts from transport costs and customs barriers and focuses on the relatively lower price of cloth in England compared to Portugal, which explains its exports and the relatively lower price of wine in Portugal, which also explains the latter's exports.

As a result, it is concluded that free trade leads to specialization in the production of each country, the development of the production of comparatively advantageous goods, an increase in output throughout the world, and also to an increase in consumption in each country.

— Essays
The beginnings of political economy and taxation, Ogiz Sotsekgiz, 1935.

— Bibliography
* Beginnings of Political Economy
* Rosa Luxemburg Ricardo against Sismondi - chapter from the book “Accumulation of Capital”