The Principles of Trade and Taxation, by David Ricardo

David Ricardo (1772 – 1823) was an English political economist. He wrote his principles as a reaction to Adam Smith’s The Wealth of Nations, and after having been encouraged by James Mill and his son John. At several points he was fairly critical of Adam Smith.

Ricardo has often been credited with systematizing economics, and surely has been one of the most influential of the classical economists, along with Thomas Malthus and Adam Smith. His writings also influenced Karl Marx.

Ricardo was also a member of Parliament, businessman, financier and speculator, who amassed a considerable personal fortune.

Ricardo is perhaps most remembered for his contribution to the theory of comparative advantage. This theory, which he partly borrowed (from Robert Torrens), provides a fundamental argument in favor of free trade between countries and of specialization among individuals. Ricardo showed that, under a given set of assumptions, there is mutual benefit from exchange even if one party is more productive in every possible area than its trading counterpart as long as each concentrates on the activities where it has a relative productivity advantage. This important conclusion is also often referred to in discussion of international trade.

Links to books by David Ricardo at Amazon US, Amazon UK, and Amazon CAN.

Tagged as: David Ricardo, exchange theory, international trade