On the Principles of Political Economy and Taxation
By David Ricardo
On the Principles of Political Economy and Taxation, was first published in 1817 (London: John Murray, Albemarle-Street), with second and third editions in quick succession.We present Ricardo’s final revision, the third edition, published in 1821, here.The three different editions encompassed several substantive changes in the development of Ricardo’s ideas. A comprehensive, readable comparison of the three editions can be found
Works of David Ricardo, Vol. 1, ed. by Pierro Sraffa with the collaboration of M. H. Dobb, Cambridge: Cambridge University Press, 1951. We are indebted to this fine work and have relied on it to correct occasional typographical misprints in the 1821 edition.Minor editorial modifications in this edition are: removing periods after the roman numerals designating kings and “per cent.” We have also substituted modern £ symbol for the historical
l. and added commas in numbers greater than 1,000.Editor
Library of Economics and Liberty
First Pub. Date
London: John Murray
The text of this edition is in the public domain. Picture of David Ricardo courtesy of The Warren J. Samuels Portrait Collection at Duke University.
- Ch.1, On Value
- Ch.2, On Rent
- Ch.3, On the Rent of Mines
- Ch.4, On Natural and Market Price
- Ch.5, Of Wages
- Ch.6, On Profits
- Ch.7, On Foreign Trade
- Ch.8, On Taxes
- Ch.9, Taxes on Raw Produce
- Ch.10, Taxes on Rent
- Ch.11, Tithes
- Ch.12, Land-Tax
- Ch.13, Taxes on Gold
- Ch.14, Taxes on Houses
- Ch.15, Taxes on Profits
- Ch.16, Taxes on Wages
- Ch.17, Taxes on Other Commodities
- Ch.18, Poor Rates
- Ch.19, Changes in the Channels of Trade
- Ch.20, Value and Riches
- Ch.21, Profits and Interest
- Ch.22, Bounties on Exportation, Importation
- Ch.23, On Bounties on Production
- Ch.24, Adam Smith concerning the Rent of Land
- Ch.25, On Colonial Trade
- Ch.26, On Gross and Net Revenue
- Ch.27, On Currency and Banks
- Ch.28, Comparative Value of Gold, Corn, and Labour
- Ch.29, Taxes Paid by the Producer
- Ch.30, Influence of Demand and Supply on Prices
- Ch.31, On Machinery
- Ch.32, Mr Malthus's Opinion on Rent
The produce of the earth—all that is derived from its surface by the united application of labour, machinery, and capital, is divided among three classes of the community; namely, the proprietor of the land, the owner of the stock or capital necessary for its cultivation, and the labourers by whose industry it is cultivated.
But in different stages of society, the proportions of the whole produce of the earth which will be allotted to each of these classes, under the names of rent, profit, and wages, will be essentially different; depending mainly on the actual fertility of the soil, on the accumulation of capital and population, and on the skill, ingenuity, and instruments employed in agriculture.
To determine the laws which regulate this distribution, is the principal problem in Political Economy: much as the science has been improved by the writings of Turgot, Stuart, Smith, Say, Sismondi, and others, they afford very little satisfactory information respecting the natural course of rent, profit, and wages.
In 1815, Mr. Malthus, in his “Inquiry into the Nature and Progress of Rent,” and a Fellow of University College, Oxford, in his “Essay on the Application of Capital to Land,” presented to the world, nearly at the same moment, the true doctrine of rent; without a knowledge of which, it is impossible to understand the effect of the progress of wealth on profits and wages, or to trace satisfactorily the influence of taxation on different classes of the community; particularly when the commodities taxed are the productions immediately derived from the surface of the earth. Adam Smith, and the other able writers to whom I have alluded, not having viewed correctly the principles of rent, have, it appears to me, overlooked many important truths, which can only be discovered after the subject of rent is thoroughly understood.
To supply this deficiency, abilities are required of a far superior cast to any possessed by the writer of the following pages; yet, after having given to this subject his best consideration—after the aid which he has derived from the works of the above-mentioned eminent writers—and after the valuable experience which a few late years, abounding in facts, have yielded to the present generation—it will not, he trusts, be deemed presumptuous in him to state his opinions on the laws of profits and wages, and on the operation of taxes. If the principles which he deems correct, should be found to be so, it will be for others, more able than himself, to trace them to all their important consequences.
The writer, in combating received opinions, has found it necessary to advert more particularly to those passages in the writings of Adam Smith from which he sees reason to differ; but he hopes it will not, on that account, be suspected that he does not, in common with all those who acknowledge the importance of the science of Political Economy, participate in the admiration which the profound work of this celebrated author so justly excites.
The same remark may be applied to the excellent works of M. Say, who not only was the first, or among the first, of continental writers, who justly appreciated and applied the principles of Smith, and who has done more than all other continental writers taken together, to recommend the principles of that enlightened and beneficial system to the nations of Europe; but who has succeeded in placing the science in a more logical, and more instructive order; and has enriched it by several discussions, original, accurate, and profound.
1* The respect, however, which the author entertains for the writings of this gentleman, has not prevented him from commenting with that freedom which he thinks the interests of science require, on such passages of the “Economie Politique,” as appeared at variance with his own ideas.
In this Edition I have endeavoured to explain more fully than in the last, my opinion on the difficult subject of VALUE, and for that purpose have made a few additions to the first chapter. I have also inserted a new chapter on the subject of MACHINERY, and on the effects of its improvement on the interests of the different classes of the State. In the chapter on the DISTINCTIVE PROPERTIES OF VALUE AND RICHES, I have examined the doctrines of M. Say on that important question, as amended in the fourth and last edition of his work. I have in the last chapter endeavoured to place in a stronger point of view than before, the doctrine of the ability of a country to pay additional money taxes, although the aggregate money value of the mass of its commodities should fall, in consequence either of the diminished quantity of labour required to produce its corn at home, by improvements in its husbandry, or from its obtaining a part of its corn at a cheaper price from abroad, by means of the exportation of its manufactured commodities. This consideration is of great importance, as it regards the question of the policy of leaving unrestricted the importation of foreign corn, particularly in a country burthened with a heavy fixed money taxation, the consequence of an immense National Debt. I have endeavoured to shew, that the ability to pay taxes, depends, not on the gross money value of the mass of commodities, nor on the net money value of the revenues of capitalists and landlords, but on the money value of each man’s revenue, compared to the money value of the commodities which he usually consumes.
March 26, 1821.
Wealth of Nations, book i, chap 10. [Actual quote is from book i, chap v.]
l. throughout in the text.
value; and render it almost impossible to explain with clearness, the main stimulus to the production of wealth, which in fact depends upon this distinction.”
Mr. Malthus appears to think that it is a part of my doctrine, that the cost and value of a thing should be the same;—it is, if he means by cost, “cost of production” including profits. In the above passage, this is what he does not mean, and therefore he has not clearly understood me.