On The Principles of Political Economy, and Taxation

Metadata

Gutenberg ID

33310

Title

On The Principles of Political Economy, and Taxation

Language

en

Book source

Project Gutenberg

Description max 80 words

David Ricardo's seminal 1817 treatise redefines political economy by establishing labor as the primary measure of value. Challenging Adam Smith's theories, Ricardo systematically analyzes the distribution of wealth among landlords, capitalists, and laborers, offering profound insights into rent, profit, wages, and taxation that remain foundational to economic thought.

Summary up to 500 words

In 'On The Principles of Political Economy, and Taxation,' David Ricardo constructs a rigorous framework for understanding economic distribution, distinguishing between 'value in use' and 'value in exchange.' He argues that while utility is essential, exchangeable value is determined by scarcity and the quantity of labor required for production. Ricardo posits that in early societies, value is governed solely by labor time, though this standard becomes variable in advanced economies due to capital accumulation and land appropriation. The work's central argument concerns the dynamics of rent and the 'iron law of wages.' Ricardo demonstrates that as population grows, society must cultivate less fertile land, driving up the cost of production and, consequently, the price of raw produce. This rise in prices benefits landlords through increased rent but squeezes profits for capitalists and forces wages up only to the level of subsistence. Ricardo critiques agricultural improvements, noting that while they increase total output, they often lower the relative price of corn and reduce rent, though they may lower money rent without affecting corn rent if they merely reduce labor costs rather than land productivity. He extends his analysis to mines, treating them similarly to land where rent is a differential surplus over the cost of production in the least productive mine worked. Ricardo also provides a comprehensive taxonomy of taxation, arguing that taxes on raw produce ultimately fall on the landlord or the consumer, while taxes on wages are borne by the laborer. He contends that taxes on capital are particularly harmful as they reduce the stock available for production. Throughout the text, Ricardo engages with contemporaries like Adam Smith and J.B. Say, correcting their views on value, rent, and the nature of wealth. The book concludes with an examination of currency, the comparative value of gold and corn, and the effects of sudden changes in trade channels, presenting a cohesive, logical, and enduring defense of classical economic principles.

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Categories

• Politics
• Economics