Arguably one of the most important economists who has lived, Ricardo’s impact on the economics profession is immense. This unique and comprehensive Companion elucidates his significance and continuing legacy.
David Ricardo is arguably one of the most important economists ever, whose impact on the profession has been and still is significant. Paul Samuelson once called him ‘the economist’s economist’ because of his detached, sober and scientific approach to economic problems. This approach also earned him the title of an ‘abstract and a priori theorist’, a man ‘with his head in the clouds’ (John Maynard Keynes). Close scrutiny shows, however, that he was not only familiar with the facts and rules of the financial sector, but had an intimate knowledge of technical progress taking place in agriculture and manufacture at the time. Hence, while Ricardo’s reasoning is abstract, he was keen to base it on premises that were in contact with the real world.
Ricardo was a stockjobber – a speculator on the stock exchange – and an extremely successful one at that. On the occasion of the Battle of Waterloo in 1815, which saw the defeat of the Napoleonic troops, he made a huge fortune. He decided to devote most of his time and energy to what he called ‘my most favourite subject’: political economy. He had come across Adam Smith’s The Wealth of Nations in 1799 during a stay with his wife in Bath and had immediately fallen in love with the subject. In altogether less than 15 years, and in parallel with many other things he did professionally and as a Member of Parliament, he succeeded in elaborating one of the most impressive oeuvres in the history of our subject. It consisted of numerous essays and pamphlets and his magnum opus, On the Principles of Political Economy, and Taxation, first published in 1817. A second edition followed in 1819, a third in 1821.
His vast correspondence with people including James Mill, J.R. McCulloch and Thomas Robert Malthus, his Parliamentary speeches, and so on, comprise several volumes in the altogether 11 volumes of The Works and Correspondence of David Ricardo (1951–73), edited by Piero Sraffa with the collaboration of Maurice H. Dobb on behalf of the Royal Economic Society. His writings and correspondence deal with basically all themes in political economy, from production to money and trade, from the private sector to the public one, from taxation to public debt. The emphasis in his reflections on economic matters is on the laws regulating the distribution of the product amongst the different classes of society, landlords, workers and capitalists, in the form of rents, wages and profits. In fact, to him, this was the ‘principal problem in Political Economy’.
His works gained him immediate recognition and admiration, but also criticisms. The situation did not change much in the course of time. Ricardo’s doctrines and propositions were and remained the objects of occasionally heated disputes. The publication of The Works and Correspondence with Sraffa’s introduction in Volume I, in combination with Sraffa’s reformulation of the ‘classical standpoint’ in Production of Commodities by Means of Commodities published in 1960, have reignited the debate about Ricardo’s legacy in economics. The deeper reason for this is to be seen in the fact that the classical economists emerge as authors of a theory of value and distribution in statu nascendi that is fundamentally different from the one advocated by the later marginalist authors from William Stanley Jevons to Léon Walras and Alfred Marshall. It was an alternative p. xivtheory, which by giving it a coherent form could no longer be brushed aside due to the teething problems affecting the original formulations in which it was handed down by Adam Smith and Ricardo. Against this background a reassessment of Ricardo’s contribution in the light of the more recent developments appears to be well justified.
There are further reasons that may be invoked on behalf of the present volume. After years, if not decades, in which the problem of income distribution was given short shrift in much of economics, it is back on the agenda with a vengeance. The change in the distribution of income and wealth that has taken place in many countries, industrialized and developing, since the last quarter of the twentieth century gave rise to a growing concern by many people, including social scientists and politicians. It suffices to mention the remarkable success of Thomas Piketty’s recent book on the topic, Capital in the Twenty-First Century (2013). In addition, several recent developments are worth reporting. They concern first and foremost a number of exegetical issues, which have led to important corrections of the picture we have of Ricardo’s views. For example, the discovery of hitherto unknown letters by Ricardo throw new light on his monetary theory. His theory of foreign trade has anew been subjected to critical scrutiny and has led to new advances in a highly complex subject matter. Several other examples could be mentioned. Here it suffices to stress the fact that Ricardo, like other great economists, had repeatedly sound intuitions into particular economic problems, but was not yet capable of expressing them in a clear and coherent way: his vision surpassed what he could state using the analytical tools and language at his disposal. A case in point is his remarkable conviction that the ‘great questions’ of income distribution ‘are not essentially connected with the doctrine of value’, a point of view that was only corroborated with Sraffa’s discovery of the ‘standard commodity’.
The gestation period of The Elgar Companion to David Ricardo was long, a great deal longer than originally planned. There are many reasons that contribute to explaining the delay of the enterprise, from authors that did not deliver and had to be replaced to the bad health of one of the editors for a longer period of time and the mourning that plagued the other editor. We are very pleased that, despite the difficulties that had to be overcome, we are now able to present the Companion to the scientific community. We take this opportunity to thank all contributors for their fine work and the referees we involved in assessing first versions of the entries for helping to improve them. We apologize to those contributors who delivered their work in good time. We are grateful to them and the publisher for their great amount of patience. May this Companion contribute to a better understanding of the works of David Ricardo and a flourishing of the ideas contained in them.
In the following the majority of references to Ricardo’s works will be to the 11 volumes of The Works and Correspondence of David Ricardo (1951–73), edited by Piero Sraffa with the collaboration of Maurice H. Dobb, Cambridge: Cambridge University Press. Passages cited or pages referred to will be indicated in the following way: Works, followed by volume number, chapter number and page number (where relevant). For obvious reasons, in the references appended to each entry, Ricardo’s Works will not be listed again.