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 metals, like other things, are obtained by labour. Nature, indeed, produces them; but it is the labour of man which extracts them from the bowels of the earth, and prepares them for our service.
Mines, as well as land, generally pay a rent to their owner; and this rent, as well as the rent of land, is the effect, and never the cause of the high value of their produce.
If there were abundance of equally fertile mines, which any one might appropriate, they could yield no rent; the value of their produce would depend on the quantity of labour necessary to extract the metal from the mine and bring it to market.
But there are mines of various qualities, affording very different results, with equal quantities of labour. The metal produced from the poorest mine that is worked, must at least have an exchangeable value, not only sufficient to procure all the clothes, food, and other necessaries consumed by those employed in working it, and bringing the produce to market, but also to afford the common and ordinary profits to him who advances the stock necessary to carry on the undertaking. The return for capital from the poorest mine paying no rent, would regulate the rent of all the other more productive mines. This mine is supposed to yield the usual profits of stock. All that the other mines produce more than this, will necessarily be paid to the owners for rent. Since this principle is precisely the same as that which we have already laid down respecting land, it will not be necessary further to enlarge on it.
It will be sufficient to remark, that the same general rule which regulates the value of raw produce and manufactured commodities, is applicable also to the metals; their value depending not on the rate of profits, nor on the rate of wages, nor on the rent paid for mines, but on the total quantity of labour necessary to obtain the metal, and to bring it to market.
Like every other commodity, the value of the metals is subject to variation. Improvements may be made in the implements and machinery used in mining, which may considerably abridge labour; new and more productive mines may be discovered, in which, with the same labour, more metal may be obtained; or the facilities of bringing it to market may be increased. In either of these cases the metals would fall in value, and would therefore exchange for a less quantity of other things. On the other hand, from the increasing difficulty of obtaining the metal, occasioned by the greater depth at which the mine must be worked, and the accumulation of water, or any other contingency, its value compared with that of other things, might be considerably increased.
It has therefore been justly observed, that however honestly the coin of a country may conform to its standard, money made of gold and silver is still liable to fluctuations in value, not only to accidental and temporary, but to permanent and natural variations, in the same manner as other commodities.
By the discovery of America and the rich mines in which it abounds, a very great effect was produced on the natural price of the precious metals. This effect is by many supposed not yet to have terminated. It is probable, however, that all the effects on the value of the metals, resulting from the discovery of America, have long ceased; and if any fall has of late years taken place in their value, it is to be attributed to improvements in the mode of working the mines.
From whatever cause it may have proceeded, the effect has been so slow and gradual, that little practical inconvenience has been felt from gold and silver being the general medium in which the value of all other things is estimated. Though undoubtedly a variable measure of value, there is probably no commodity subject to fewer variations. This and the other advantages which these metals possess, such as their hardness, their malleability, their divisibility, and many more, have justly secured the preference every where given to them, as a standard for the money of civilized countries.
If equal quantities of labour, with equal quantities of fixed capital, could at all times obtain, from that mine which paid no rent, equal quantities of gold, gold would be as nearly an invariable measure of value, as we could in the nature of things possess. The quantity indeed would enlarge with the demand, but its value would be invariable, and it would be eminently well calculated to measure the varying value of all other things. I have already in a former part of this work considered gold as endowed with this uniformity, and in the following chapter I shall continue the supposition. In speaking therefore of varying price, the variation will be always considered as being in the commodity, and never in the medium in which it is estimated.
Economie Politique, by J.B. Say, vol. ii. p. 124.
demanded, diminishes at the same time as the quantity supplied. Besides, it is not observed that corn is more dear in those places where there is plenty of uncultivated land, than in completely cultivated countries. England and France were much more imperfectly cultivated in the middle ages than they are now; they produced much less raw produce: nevertheless from all we can judge by a comparison with the value of other things, corn was not sold at a dearer price. If the produce was less, so was the population; the weakness of the demand compensated the feebleness of the supply.” Vol. ii. 338. M. Say being impressed with the opinion that the price of commodities is regulated by the price of labour, and justly supposing that charitable institutions of all sorts tend to increase the population beyond what it otherwise would be, and therefore to lower wages, says, “I suspect that the cheapness of the goods, which come from England, is partly caused by the numerous charitable institutions which exist in that country.” Vol. ii. 277. This is a consistent opinion in one who maintains that wages regulate price.
In them nature does nothing, man does all; and the reproduction must always be in proportion to the strength of the agents that occasion it. The capital employed in agriculture, therefore, not only puts into motion a greater quantity of productive labour than any equal capital employed in manufactures, but in proportion too, to the quantity of the productive labour which it employs, it adds a much greater value to the annual produce of the land and labour of the country, to the
real wealth and revenue of its inhabitants. Of all the ways in which a capital can be employed, it is by far the most advantageous to the society.” Book II, chap. v. p. 15.
Does nature nothing for man in manufactures? Are the powers of wind and water, which move our machinery, and assist navigation, nothing? The pressure of the atmosphere and the elasticity of steam, which enable us to work the most stupendous engines—are they not the gifts of nature? to say nothing of the effects of the matter of heat in softening and melting metals, of the decomposition of the atmosphere in the process of dyeing and fermentation. There is not a manufacture which can be mentioned, in which nature does not give her assistance to man, and give it too, generously and gratuitously.
In remarking on the passage which I have copied from Adam Smith, Mr. Buchanan observes, “I have endeavoured to show, in the observations on productive and unproductive labour, contained in the fourth volume, that agriculture adds no more to the national stock than any other sort of industry. In dwelling on the reproduction of rent as so great an advantage to society, Dr. Smith does not reflect that rent is the effect of high price, and that what the landlord gains in this way, he gains at the expense of the community at large. There is no absolute gain to the society by the reproduction of rent; it is only one class profiting at the expense of another class. The notion of agriculture yielding a produce, and a rent in consequence, because nature concurs with human industry in the process of cultivation, is a mere fancy. It is not from the produce, but from the price at which the produce is sold, that the rent is derived; and this price is got not because nature assists in the production, but because it is the price which suits the consumption to the supply.”
d. for 170: 180: £4 4
d.; or, as in the production of 170 quarters, the labour of ten men is necessary in one case, and only of 9.44 in the other, the rise would be as 9.44 to 10, or as £4 to £4 4
d. If 10 men be further employed, and the return be
|160, the price will rise to £4 10
|150, the price will rise to £4 16
|140, the price will rise to £5 2
Now if no rent was paid for the land which yielded 180 quarters, when corn was at £4 per quarter, the value of 10 quarters would be paid as rent when only 170 could be procured, which at £4 4
d. would be £42 7
|20 qrs. when 160||were produced, which at £4 10
|would be £90 0
|30 qrs. … 150||…. 4 16
|… 144 0
|40 qrs. … 140||…. 5 2
|… 205 13
|Corn rent would increase
in the proportion of
|and money rent in the