David Ricardo, a British, lived between 18-4-1772 and 11-09-1823. As a grown up, he spent his life as a political economist and a stock trader. He played a major role in transforming economics. Together with […]
David Ricardo, a British, lived between 18-4-1772 and 11-09-1823. As a grown up, he spent his life as a political economist and a stock trader. He played a major role in transforming economics. Together with Thomas Malthus, John Stuart Mill and Adam Smith, they brought a lot of impact and transformation to classical economics. In addition, Ricardo was also a businessman, a speculator and a financier. He also got a chance to be a Member of Parliament.
David Ricardo’s personal life
David Ricardo hailed from a Sephardic Jewish family. He was the third born of the family. He had sixteen other siblings. His parents had moved from Denmark and they were believed to be of Portuguese origin. He was disowned by his father, A stockbroker, while he was 21 years old. Reason? He eloped with Priscilla Anne Wilkinson, an act that also made his mother not to communicate with him any longer.
After the elopement, Ricardo’s life was faced with hardship. This forced him to look for ways and means to make ends meet. Without the help from his family, Ricardo decided to be a stockbroker. He actually became a successful stockbroker since he was not green in the business because he had created some connections while he was working with his father.
David Ricardo is among those few personalities who managed to achieve success and lasting fame. When he died, he had accumulated millions of dollars, approximately $100 million in present days dollars. The Battle of Waterloo significantly changed his life. He had bet against the victory of France and thus made an investment in the British securities. This contributed to his success.
His contributions to economics
David Ricardo is a famous person. One of the aspects that made him to be known across the world is his contribution to the law of comparative advantage. The law of comparative advantage focused on free trade among various countries while each one specialized in production in some commodity which it has a comparative advantage over others.
While he was 27 years old, David Ricardo, his contribution to Economics began. It was the time he began to make constructive criticisms and agreements to various economic concepts that existed during that time. His interest in economics started after reading ‘the wealth of nations’ by Adam Smith. This triggered him to inquire into the discipline of economics. At the age of 37 years, he produced his first economics article.
He first gained fame in economics when he commented on the ” bullion controversy” In 1809, he wrote an article arguing that the main cause of inflation in England was the Propensity of the Bank of England in delivering excess notes. He believed in the Quantity theory of money a title that is currently referred to as Monetarism. He was a monetarist. He also made a contribution to what is currently called the law of diminishing marginal returns. This is evident in his writing about the effects of low prices of corn on the profits of stock, a publication he made in 1815. The law of diminishing marginal returns is a widely used law in economics. Under the law, he emphasized that resources as resources are combined for the production of commodities, their repeated use will eventually lead to a reduction in output. His arguments were based on factors of production i.e. land, labor and capital.
While arguing in favor of free trade, his formulation of the theory of comparative costs, currently comparative advantage has been of significance to the present day economists. His writings and argument long before other economics popularized the use of equations and other mathematical tools in arriving at solutions to complex economics concepts.
Regardless of the fact that David Ricardo spent a relatively short part of his life in contributing to economics, he played a significant role in giving economics a meaning. His views and contributions worn a lot of support not only in England but also the entire world. His work has given solid answers to monetary and taxation questions. Most present day writers derive a lot from David Ricardo’s work. Writers of various persuasions rely heavily upon his ideas. Even those who advocated for laissez-fair and capitalism see a lot of meaning in his work. This is evident from the publications seen in various articles e.g. the Marxist articles.