THE LIFE AND ECONOMICS OF DAVID RICARDO

THE LIFE AND ECONOMICS OF DAVID RICARDO

THE LIFE AND ECONOMICS OF DA VID RICARDO By John P. HenJersont Wah Supplemenlal Chaplers By lohn B. Davis EJaeJ By Warren J. Samuels anj Gilberl B. Davis... " Springer Science+Business Media, LLC

Library of Congress Cataloging-in-Publication Data Henderson, John P., 1919- The life and economies of David Ricardo / by John P. Henderson, with supplement al chapters by John B. Davis ; edited by Warren J. Samuels and Gilbert B. Davis. p. cm. Includes bibliographical references (p. ) and index. ISBN 978-1-4613-7809-9 ISBN 978-1-4615-6129-3 (ebook) DOI 10.1007/978-1-4615-6129-3 1. Ricardo, David, 1772-1823. 2. Economists--Great Britain- Biography. 3. Economics--History--19th century. I. Ricardo, David, 1772-1823. 11. Davis, John Bryan. III. Samuels, Warren 1., 1933-. IV. Davis, Gilbert B. V. Title. HB103.R5H46 1997 330.15' 13'092--dc21 [B] 97-16305 CIP Copyright 1997 Springer Science+Business Media New York Originally published by Kluwer Academic Publishers in 1997 Softcover reprint ofthe hardcover 1st edition 1997 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, mechanical, photo-copying, recording, or otherwise, without the prior written permission of the publisher, Springer Science+Business Media, LLC. Printed on acid-free paper

For Margaret anj for our chiljren Blair Palricia HenJerson T onelh anj Scou Rifkin HenJerson

David Ricardo April 18, 1772 - Seplember 11, 1823

John PalricL: HenJerson April 23. 1919 - February 16. 1995

CONTENTS INTRODUCTION by Warren J. Samuels I. TI-lE MULTIPLE ROLE OF TI-lE BIOGRAPHER 15 II. Ricardo's Three Careers Ricardo The Man and His Times Ricardo and lhe Economisls Sraffa's Ricardo The Posl-Sraffa Lileralure The Ingredienls of Biography TI-lE SEPHARDIC HERITAGE IN ENGLISH SOCIETY Religion and Commerce The Judah-Israel Kingdom The Early Jews of England The Period of lhe Expulsion The London Sephardim 18 19 26 36 40 42 51 55 58 64 70 76 III. TI-lE FAMILY HERITAGE: EIGHTEENTI-I-CENTURY FINANCE The Israel Ricardos The New Inslrumenls of Credil and Finance Origins of lhe London Sloclc Exchange The JacobHe Threal The Family of Abraham Israel Ricardo and Abigail Delvalle 79 81 86 89 99 105

x IV. BOYHOOD IN LONDON AND AMSTERDAM 113 CountrysiJe anj Cily 115 TIe CUy anj Metropolis of Lon Jon 121 TIe Lon Jon Mob 128 TIe Parental Family 134 DaviJ's EJucation 142 TIe Years in AmsterJam 147 A Rile of Passage 153 V. 1HE TAMING OF TRADITION 155 Bow anj OIJ F orj 159 TIe IJenlily Conflicl 166 "0 sman " an J"J esse " 179 TIe Lifestyle of DaviJ anj Priscilla 185 VI. 1HE GESTATION OF AN ECONOMIST: EARL Y FINANCIAL CAREER 191 TIe Water anj Ihe Fish 195 "Romer's Rule" 198 "Lei Your Profils Run On" 212 Political Economy During the First DecaJe of Ihe Cenlury 220 Monetary ExpeJiency 241 VII. MAL 1HUS AND 1HE CORN LAW: RICARDO AND HIS CIRCLE 269 James Mill anj Roberl Mallhus 274 TIe Private Debate, 1811-1815 300 Public Debate. 1815: Mahhus anj RicarJo on the Corn Law 315 "Over Again More at Large" 332 TIe Facility of ProJuclion. Relative Prices anj the EHecls Upon ProfUs 341 Bank of EnglanJ Profits anj A Partial Relurn 10 Specie Payment 354

xi VIII. RICARDO'S PRINCIPLES AND THE QUESTION OF VALUE 'Ihe Provident Insti1utions New Crilics and Conver1s W riling the Principles 'Ihe Role of Ricardo's 'Iheory of Value 'Ihe 'Iheory of Value in the First Edition 'Ihe Reaclion 10 Ricardo's Firs1 Edition Changes in Ricardo's Second Edition 'Ihe 'Iheory of Value in the 'Ihird Edition 373 388 398 4f9 432 439 449 477 485 IX. FRIENDLY CRITICS: MAL THUS AND RICARDO ON POLITICAL ECONOMY 507 Mahhus' s Concepl of Effective Demand and Its Influence Upon Ricardian Analysis 508 Mahb.us's 'Iheory of Value 50 'Ihe Role of Demand 5 f 4 'Ihe 'Iheory of Profits 5 f 5 'Ihe 'Iheory of Renl 5 f 7 Summary of Mahhus's Principles 5f9 Ricardo's "Noles on Mahhus" 520 Mahhus's Measure of Value 522 'Ihe Polilical Economy Club: Rober1 Torrens and lhe Decline of Ricardo's Influence 526 X. A NEW CAREER IN POLITICS 555 'Ihe Debale Over Ricardo in Parliament 558 Ricardo's Two Essays on Parliamentary Reform 562 "Observations on Parliamentary Reform" 562 "Defense of the Plan of Voting By Ballot" 565 Ricardo on Religious Toleration 568 Conclusions 573 XI. EQUIVOCATION: THE EFFECTS OF MACHINERY ON THE DEMAND FOR LABOR 575 Barton's OLservalions 577 "On MaChinery" 580

XlI The Challenge 10 Ricardo's Vision The Challenge 10 Ricardo's Economic Melhodology Concluding Remarks 586 591 594 XII. 1HE SEARCH FOR A MEASURE OF ABSOLUTE VALUE Ricardo's Two Problems in Thinking Aboul An Invariable Slandard "Absolule Value and Exchangeable Value" The Firsl Drah The Unfinished Drah Sraffa's Inlerprelation XIII. A CRITIQUE OF 1HE TWENTIE1H CENTURY PERSPECTIVE The Partial Eclipse of Ricardian Theory The Srana Edition of Ricardo The Reaction 10 Sraffa's "Ricardo" Conclusion 595 596 603 603 606 611 615 621 632 645 656 REFERENCES 657 INDEX 677