David Ricardo

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David Ricardo
Classical economics

Portrait of David Ricardo by Thomas Phillips, circa 1821.
This painting shows Ricardo, aged 49, just two years before
his relatively early death.
Born
18 April 1772
London, England
Died
11 September 1823 (aged 51)
Gatcombe Park, Gloucestershire, England
Nationality British
Influences Smith Bentham
Influenced
Ricardian Socialists George John Stuart
Mill Sraffa Barro John Ramsay
McCulloch Franz Oppenheimer
Contributions
Ricardian equivalence, labour theory of
value, comparative advantage, law of
diminishing returns, Economic rent
[1]

David Ricardo (18 April 1772 11 September 1823) was a British political economist and stock
trader. He was often credited with systematizing economics, and was one of the most influential
of the classical economists, along with Thomas Malthus, Adam Smith, and John Stuart Mill.
[2][3]

He was also a member of Parliament, businessman, financier and speculator, who amassed a
considerable personal fortune. Perhaps his most important contribution was the theory of
comparative advantage, a fundamental argument in favour of free trade among countries and of
specialisation among individuals. Ricardo argued that there is mutual benefit from trade (or
exchange) even if one party (e.g. resource-rich country, highly skilled artisan) is more productive
in every possible area than its trading counterpart (e.g. resource-poor country, unskilled
labourer), as long as each concentrates on the activities where it has a relative productivity
advantage.
[4]

Value theory [edit]
Ricardo's most famous work is his Principles of Political Economy and Taxation (1817). Ricardo
opens the first chapter with a statement of the labour theory of value. Later in this chapter, he
demonstrates that prices do not correspond to this value. He retained the theory, however, as an
approximation. The labour theory of value states that the relative price of two goods is
determined by the ratio of the quantities of labour required in their production. His labour theory
of value, however, required several assumptions:
1. both sectors have the same wage rate and the same profit rate;
2. the capital employed in production is made up of wages only;
3. the period of production has the same length for both goods.
Ricardo himself realized that the second and third assumptions were quite unrealistic and hence
admitted two exceptions to his labour theory of value:
1. production periods may differ;
2. the two production processes may employ instruments and equipment as capital and not just
wages, and in very different proportions.
Ricardo continued to work on his value theory to the end of his life
Thomas Robert Malthus
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Thomas Robert Malthus
Classical economics

Thomas Robert Malthus
Born
14 February 1766
Surrey, England
Died
29 December 1834 (aged 68)
Bath, England
Field Demography, macroeconomics
Opposed
William Godwin, Marquis de Condorcet,
Jean-Jacques Rousseau, David Ricardo
Influences
David Ricardo, Jean Charles Lonard de
Sismondi
Influenced
Charles Darwin, Paul R. Ehrlich, Francis
Place, Raynold Kaufgetz, Garrett Hardin,
John Maynard Keynes, Pierre Franois
Verhulst, Alfred Russel Wallace, William
Thompson, Karl Marx, Mao Zedong
Contributions Malthusian growth model
The Reverend (Thomas) Robert Malthus FRS (13 February 1766 23 December 1834
[1]
) was a
British cleric and scholar, influential in the fields of political economy and demography.
[2]

Malthus himself used only his middle name Robert. He popularised the theory of economic
rent.
[3]

Malthus became widely known for his theories about change in population. His An Essay on the
Principle of Population observed that sooner or later population will be checked by famine and
disease. He wrote in opposition to the popular view in 18th-century Europe that saw society as
improving and in principle as perfectible.
[4]
He thought that the dangers of population growth
precluded progress towards a utopian society: "The power of population is indefinitely greater
than the power in the earth to produce subsistence for man".
[5]
As a cleric, Malthus saw this
situation as divinely imposed to teach virtuous behaviour.
[6]
Malthus wrote:
That the increase of population is necessarily limited by the means of subsistence,
That population does invariably increase when the means of subsistence increase, and,
That the superior power of population is repressed, and the actual population kept equal to the
means of subsistence, by misery and vice.
[7]

Malthus placed the longer-term stability of the economy above short-term expediency. He
criticised the Poor Laws,
[8]
and (alone among important contemporary economists) supported the
Corn Laws, which introduced a system of taxes on British imports of wheat.
[9]

Malthus became hugely influential, and controversial, in economic, political, social and scientific
thought. Many pioneers of evolutionary biology read him, notably Charles Darwin and Alfred
Russel Wallace, the proponents of natural selection.
[10][11]
He remains a much-debated writer.

John Maynard Keynes
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John Maynard Keynes
Keynesian economics

Keynes on March 8, 1946
Born
5 June 1883
Cambridge, Cambridgeshire, England,
United Kingdom
Died
21 April 1946 (aged 62)
Tilton, near Firle, East Sussex, England,
United Kingdom
Nationality British
Field Political economy, probability
Alma mater King's College, Cambridge
Opposed Marx Hayek Marshall Pigou
Influences
Adam Smith David Ricardo David
Hume John Stuart Mill Thomas
Malthus Silvio Gesell George Boole
G. E. Moore William Ernest Johnson
Bertrand Russell Alfred North
Whitehead Alfred Marshall Knut
Wicksell Dennis Robertson Micha
Kalecki
Influenced
Simon Kuznets Paul Samuelson John
Hicks G. L. S. Shackle William
Vickrey John Kenneth Galbraith Hyman
Minsky Robert Shiller Joseph Stiglitz
Paul Krugman Joan Robinson Stephany
Griffith-Jones Inge Kaul Steve Keen
Contributions
Macroeconomics, Keynesian economics,
Liquidity preference, Spending multiplier,
Aggregate Demand-Aggregate Supply
model
John Maynard Keynes, 1st Baron Keynes,
[1]
CB, FBA (/kenz/ KAYNZ; 5 June 1883 21
April 1946) was a British economist whose ideas have fundamentally affected the theory and
practice of modern macroeconomics, and informed the economic policies of governments. He
built on and greatly refined earlier work on the causes of business cycles, and is widely
considered to be one of the founders of modern macroeconomics and the most influential
economist of the 20th century.
[2][3][4][5]
His ideas are the basis for the school of thought known as
Keynesian economics, and its various offshoots.
In the 1930s, Keynes spearheaded a revolution in economic thinking, overturning the older ideas
of neoclassical economics that held that free markets would, in the short to medium term,
automatically provide full employment, as long as workers were flexible in their wage demands.
Keynes instead argued that aggregate demand determined the overall level of economic activity,
and that inadequate aggregate demand could lead to prolonged periods of high unemployment.
He advocated the use of fiscal and monetary measures to mitigate the adverse effects of
economic recessions and depressions. Following the outbreak of the Second World War,
Keynes's ideas concerning economic policy were adopted by leading Western economies. In
1942, Keynes was awarded a hereditary peerage as Baron Keynes of Tilton in the County of
Sussex.
[6]
Keynes died in 1946, but during the 1950s and 1960s the success of Keynesian
economics resulted in almost all capitalist governments adopting its policy recommendations.
Keynes's influence waned in the 1970s, partly as a result of problems that began to afflict the
Anglo-American economies from the start of the decade, and partly because of critiques from
Milton Friedman and other economists who were pessimistic about the ability of governments to
regulate the business cycle with fiscal policy.
[7]
However, the advent of the global financial crisis
in 2007 caused a resurgence in Keynesian thought. Keynesian economics provided the
theoretical underpinning for economic policies undertaken in response to the crisis by President
George W. Bush of the United States, Prime Minister Gordon Brown of the United Kingdom,
and other heads of governments.
[8]

In 1999, Time magazine included Keynes in their list of the 100 most important and influential
people of the 20th century, commenting that: "His radical idea that governments should spend
money they don't have may have saved capitalism."
[9]
He has been described by The Economist
as "Britains most famous 20th-century economist."
[10]
In addition to being an economist,
Keynes was also a civil servant, a director of the British Eugenics Society, a director of the Bank
of England, a patron of the arts and an art collector, a part of the Bloomsbury Group of
intellectuals,
[11][12]
an advisor to several charitable trusts, a writer, a philosopher, a private
investor, and a farmer.
Karl Marx
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Karl Marx

Marx in 1875
Born
Karl Heinrich Marx
5 May 1818
Trier, Kingdom of Prussia
Died
14 March 1883 (aged 64)
London, United Kingdom
Residence Germany, United Kingdom
Nationality Prussian, German,
Era 19th-century philosophy
Region Western Philosophy, German philosophy
Religion Protestantism; later, none (atheist)
School
Marxism, Communism, Socialism,
Materialism
Main interests
Politics, economics, philosophy, sociology,
labour, history, class struggle, natural
sciences
Notable ideas
Co-founder of Marxism (with Engels),
surplus value, contributions to the labor
theory of value, class struggle, alienation
and exploitation of the worker, The
Communist Manifesto, Das Kapital,
materialist conception of history
Influenced by
Hegel, Feuerbach, Spinoza, Proudhon, Stirner, Smith,
Voltaire, Ricardo, Vico, Robespierre, Rousseau,
Shakespeare, Goethe, Helvetius, d'Holbach,
[1]
Liebig,
[2]

Darwin, Fourier, Robert Owen, Hess, Guizot, Pecqueur,
[3]

Aristotle, Epicurus
Influenced
Lenin, Stalin, Trotsky, Mao, Tito, Kim il-sung, Kim Jong-il,
Hoxha, Castro, Guevara, Ho, Sartre, Simone de Beauvoir,
Luxemburg, Lukcs, Gramsci, Korsch, Bloch, Kropotkin,
Bakunin, Marcuse, Deleuze, Debord, Negri, Taussig, Roy,
Laclau, Bourdieu, Schumpeter, Habash, Aflaq, Newton and
many others
Signature

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Karl Heinrich Marx (German pronunciation: a han ma s, 5 May 1818 14 March
1883) was a German philosopher, economist, sociologist, historian, journalist, and revolutionary
socialist. Marx's work in economics laid the basis for the current understanding of labor and its
relation to capital, and has influenced much of subsequent economic thought.
[4][5][6][7]
He
published numerous books during his lifetime, the most notable being The Communist Manifesto
(1848) and Das Kapital (18671894).
Born into a wealthy middle-class family in Trier in the Prussian Rhineland, Marx studied at the
University of Bonn and the University of Berlin, where he became interested in the philosophical
ideas of the Young Hegelians. After his studies, he wrote for a radical newspaper in Cologne,
and began to work out his theory of dialectical materialism. He moved to Paris in 1843, where he
began writing for other radical newspapers and met Fredrick Engels, who would become his
lifelong friend and collaborator. In 1849 he was exiled and moved to London together with his
wife and children where he continued writing and formulating his theories about social and
economic activity. He also campaigned for socialism and became a significant figure in the
International Workingmen's Association.
Marx's theories about society, economics and politicscollectively known as Marxismhold
that human societies progress through class struggle: a conflict between an ownership class that
controls production and a proletariat that provides the labour for production. He called capitalism
the "dictatorship of the bourgeoisie," believing it to be run by the wealthy classes for their own
benefit; and he predicted that, like previous socioeconomic systems, capitalism produced internal
tensions which would lead to its self-destruction and replacement by a new system: socialism.
[8]

He argued that under socialism society would be governed by the working class in what he called
the "dictatorship of the proletariat", the "workers' state" or "workers' democracy".
[9][10]
He
believed that socialism would eventually be replaced by a stateless, classless society called
communism. Along with believing in the inevitability of socialism and communism, Marx
actively fought for the former's implementation, arguing that social theorists and underprivileged
people alike should carry out organised revolutionary action to topple capitalism and bring about
socio-economic change.
[11]

Revolutionary socialist governments espousing Marxist concepts took power in a variety of
countries in the 20th century, leading to the formation of such socialist states as the Soviet Union
in 1922 and the People's Republic of China in 1949. Many labour unions and workers' parties
worldwide were also influenced by Marxist ideas, while various theoretical variants, such as
Leninism, Stalinism, Trotskyism, and Maoism, were developed from them. Marx is typically
cited, with mile Durkheim and Max Weber, as one of the three principal architects of modern
social science.
[12]
Marx has been described as one of the most influential figures in human
history.
[13][14]