In 1815, Ricardo published his groundbreaking Essay on..Profits.
Ricardo's law of rent was probably his most notable and influential discovery. It was based on the observation that the differing fertility of land yielded unequal profits to the capital and labour applied to it. Differential rent is the result of this variation in the fertility of land. This principle was also noted at much the same time by Malthus, West, Anderson, and others. His other great contribution, the law of comparative cost, or comparative advantage, demonstrated the benefits of international specialisation of the commodity composition of international trade. This was at the root of the free trade argument which set Britain firmly on the course of exporting manufactures and importing foodstuffs. His success in attaching other economists, particularly James Mill and McCulloch, to his views largely accounted for the remarkable dominance of his ideas long after his own lifetime. Though much of this was eventually rejected, his abstract method and much of the theoretical content of his work became the framework for economic science at least until the 1870s.
Key Points Of Adam Smith David Ricardo Economics Essay
Career Successor to Adam Smith's pre-eminent position in British economics, his influence continued to dominate the aims and methods of the discipline throughout the nineteenth century. Despite his own considerable practical experience, his writings are severely abstract and frequently difficult. His chief emphasis was on the principles of diminishing returns in connection with the rent of land, which he believed also regulated the profits of capital. He attempted to deduce a theory of value from the application of labour, but found it difficult to separate the effects of changes in distribution from changes in technology. The questions thus raised about the labour theory of value were taken up by Marx and the so-called `Ricardian socialists' as a theoretical basis for criticism of established institutions.
In the context of the Essay model, Ricardo argues that free interindustry trade involv-ing an exchange of manufactures for agricultural good (from England’s point of view) raises the rate of profit through lowering the relative price of the agricultural good.