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> David RicardoEconomists - David Ricardo (1772-1823)
He developed many important areas of economic theory and was great friends with other classical economists - Thomas Malthus and Jean-Baptiste Say. Along with Malthus he was fairly pessimistic about the long-term prognosis for society, and so has been proved well and truly wrong on that score (so far?). However, much of the theory he developed is still used and taught today. Along with many other Classical economists, the titles of Ricardo's
works do not have the ring of best-sellers about them, but in their time
(and now!) they are judged to be very significant. Because of his
background in the money markets and Stock Exchange, much of his early work
was on these subjects. His more significant works were on market economics though:
Ricardo developed key theories, that are still important in economics courses today like:
Ricardo's theory on international trade focused on comparative costs and looked at how a country could gain from trade when it had relatively lower costs (i.e. a comparative advantage). The original example focused on the trade in wine and cloth between England and Portugal. Ricardo showed that if one country produced a good at a lower opportunity cost than another country, then it should specialize in that good. The other country would therefore specialize in the other good, and the two countries could then trade. It's not too difficult to work out which good Portugal should specialize in - wine or cloth?! The same would almost certainly be true today. If all countries specialized where they had a comparative advantage, then the level of world welfare should increase. |
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April 01, 2002