David Ricardo

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Like a sharp chisel, David Ricardo sculpted the 19th century into a new world. One of 17 children, David Ricardo seeped from a line of Iberian Jews, who after a stay in Holland, immigrated to England in 1772. Having started his career at the London Stock Exchange, David Ricardo confirmed that the apple does not fall far from the tree. Ricardo’s father was a stockbroker, who aspired to see his son follow in his footsteps. But did he? What a disappointment David Ricardo must have been to his family when he, at 21, married a Quaker. Though practically disowned by his family, Ricardo’s understanding of investments translated to quick riches when he began trading in government securities for himself. When only in his early forties, David Ricardo had amassed enough wealth to retire and run for a parliamentary seat. As a politician, David Ricardo continued his preoccupation with financial matters. Dilemmas like the repealing of the Corn Laws, the ever mounting federal debt and capital taxation plagued him. Then life webbed his skills when making sure that David Ricardo reads the best book of his time, The Wealth of Nations, authored by Adam Smith.After much encouragement, David Ricardo began inking his thoughts on the major economic problems of his day, and he thus created the classical approach to the theory of money. David Ricardo argued for Say’s law, which states that market equilibrium is constant, and that a surplus of goods and services is impossible. But what David Ricardo is most famous for are his Differential Theory of Rent and the Law of Diminishing Marginal Returns. In his marvelous treatise, Principles of Political Economy and Taxation (1817), Ricardo finally integrated a theory of value into his Theory of Distribution, which changed his earlier views. One of David Ricardo’s most fascinating works is the “labor-embodied” theory of value or LTV, in which Ricardo examines value, wages, labor, and income distribution. David Ricardo’s exploration was not relegated to domestic affairs alone. He dabbled in international economics as the owner of the Comparative Advantage Theory. In this theory Ricardo contends that trade is beneficial even when it produces a net-import, because it increases incomes in all trading countries. Because of how well David Ricardo had organized classical economic thoughts, subscribers to his philosophies belong to the Ricardian School: the essence of classical economics, practiced by many economists, even today.David Ricardo is also known for Theory of Comparative Costs, The Iron Law of Wages, The Ricardian Theory of Profits, International Trade Theory, Theory of Value, and much more.

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