David Ricardo: The Pinnacle of Classical Political Economy (Part I)

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Li Yiping/Wen

Ricardo and his time

The research of every economist is deeply imprinted by the times. This is historical materialism.

Classical British political economy originated with William Petit. Petit was an economist in the transition from mercantilism to classical economics, who believed that gold and silver were the only representatives of wealth, and that wealth came from selling more and buying less, advocating that the government promote more selling and buying less through intervention. Based on this, Pidi attaches special importance to commerce and foreign trade, believing that the benefits of industry are much more than those of agriculture, and the benefits of commerce are much more than those of industry, which is also the source of the "Ppidi-Clarke theorem". Petit was the first to propose the labor theory of value, saying, "If one can transport an ounce of silver from the peruvian silver mines to London in the time of producing a bushel grain, then the latter is the natural price of the former, that is, the value." "Labor is the father of wealth, and land is the mother of wealth" is a well-known saying in Pidi.

Adam Smith was an economist in the workshop era, when the Industrial Revolution was just beginning and its economic and social impact had not yet been fully felt. What Smith saw was the division of labor unique to the handicraft industry in the workshop, and specialization brought unprecedented economic and social benefits. According to this, the genius Smith created the theory of the market economy with his rare wisdom. The division of labor is specialization, the division of labor is to give play to comparative advantages, and the division of labor will inevitably lead to exchange. The market is the most valuable resource under the market economy. "A Study on the Nature and Causes of National Wealth" is epoch-making, telling people that the market economy can enrich the country and enrich its people, and it is a harmonious road. Contemporary China's economic development lies in the choice of a socialist market economy.

David Ricardo was an economist during the Industrial Revolution. The objects and methods of his political economy, the contradictions and struggles he faced, and the goals he fought for all reflected the characteristics of the industrial revolution. He took the cause of Adam Smith to the pinnacle.

David Ricardo (1772-1823) was born into a family of wealthy exchange brokers in London. He was poorly educated in his early years, trading with his father from the age of 14 and earning money through speculation, becoming a million-pound asset at the age of 25. As a businessman, Ricardo had a special talent, and his brother once commented: "Probably the best indication of his extraordinary talent is his ability to do business." He has knowledge of all the subtle twists and turns in the business, and he calculates numbers with incredible speed. For his own huge transactions, he has the ability to do it calmly and without much effort. His composure, composure and quick judgment have left his colleagues on the stock exchange far behind him."

After Becoming a fortune, David Ricardo began to devote himself to learning and scientific research. He was initially enthusiastic about the natural sciences, but after reading Adam Smith's "A Study of the Nature and Causes of National Wealth" in 1799, he became interested in political economy and began a lifelong career of research.

What brought Ricardo's economic ideas to the pinnacle of Hisitmetics, along with Adam Smith's, is The Principles of Political Economy and Taxation (hereinafter referred to as the Principles). Prior to this, Ricardo had also published some influential papers. For example, the "Price of Gold" in the British Morning Post on August 29, 1809, criticized the bank of England's policy of indiscriminately issuing paper money at that time. Although the government prefers to issue paper money (and still does today), it will cause panic. For example, Ricardo was very concerned about the struggle between the landlord class and the nascent industrial bourgeoisie, which he considered to be the representative of the advanced productive forces. From the standpoint of developing the productive forces, he published commentaries on the impact of low grain prices on capital profits.

Ricardo wrote many reviews, and these short economic review articles were highly targeted and were real theoretical hussars who conducted research with problems. He made a great contribution to the development of classical economics by studying and solving practical problems and abstracting them into theories, and these critical articles were also necessary preparations for his famous economic book", "Political Economy and the Principles of Taxation". Without these glittering commentaries, there might not have been a later Principle.

In 1817, Ricardo's Political Economy and the Principles of Taxation was published, an epoch-making work of economics that took british classical political economy to a new highest level. In this work, Ricardo discusses the problem of value, the problem of land rent, the problem of distribution, the problem of international trade, etc., all of which were the problems that must be solved by economic and social development at that time. Proceeding from the development of social productive forces, Ricardo focused on the issue of distribution, believing that distribution is the center of the study of political economics. Coincidentally, the Influential Contemporary French economist Thomas Piketty, in his widely influential Capital of the 21st Century, also regards distribution as the central issue in the study of political economy in response to the phenomenon of polarization.

This central view differs from Marx, who believed that production determines distribution, circulation and consumption, and production should first be studied. However, Marx attached great importance to Ricardo's "Political Economy and The Principles of Taxation", and in the fourth volume of Capital, "TheOry of Surplus Value", he analyzed and evaluated the "Principles" in 1/3 of the space, especially the irrational structure of the "Principles". Marx said, "Ricardo's whole work is already included in its first two chapters."

The structure is irrational but flawed, and the clarity and sharpness of the problems raised by Ricardo in the "Principles" and the consistency and thoroughness of the methods used greatly exceed Smith's "The Wealth of Nations". Soon after the publication of The Principia, Ricardo gained a reputation as a first-rate economist. In 1819, two years after the Principia was published, Ricardo was elected to the House of Commons of the British Parliament. In Parliament, he debated not only economic issues, but also political issues. He advocated parliamentary reform, insisted on free trade, opposed the Corn Laws, recommended lower food prices and taxes in Parliament, and advocated democratic demands.

After the publication of Ricardo's Political Economy and the Principles of Taxation, the situation in the economy, society, class struggle and other aspects has undergone great changes, and economics has gradually become vulgar. Marx wrote: "The class struggle takes an increasingly distinct and threatening form in practice and in theory. It sounded the death knell of scientific bourgeois economics. Now the question is no longer whether this or that principle is correct, but whether it is beneficial or harmful to capital, convenient or inconvenient, contrary to the police or not. Impartial research gives way to the struggles of well-bred literati, and impartial scientific inquiry gives way to the bad intentions of apologists. "The peculiarity of vulgar economics is the defense of objective facts.

2. Ricardo's social outlook and research methods

Adam Smith believed that the reason why our economic system should be a market economy is that people are generally self-interested. Under the constraints of traffic light rules, people pursue their own interests, which can maximize the interests of society. History proves that people always have to find a system that conforms to human nature in search of a system that is efficient.

David Ricardo continues Adam Smith's assumptions about economic people and self-interest. The Physiocrats (represented by the French court physician Quesnay) believed that only the agricultural sector was the productive sector, creating products and increasing social wealth. Both the Physiocrats and Smith were based on the idea of natural order or reason, while Ricardo and later the bourgeois economists were based on Bentham's utilitarian philosophy.

Jerry juridical Bentham was an English jurist and utilitarian philosopher. Bentham believed that society should be completely subordinate to the individual. In his own words, society is just a "fictional organism" made up of individuals. According to this view, Bentham regarded personal interests as the norm of human behavior. According to his opinion, everyone follows only utilitarianism in his own activities, that is, seeking pleasure and avoiding suffering. Bentham's philosophical ideas can be summed up in the highest principle on which it follows: to make people happy, to make happiness in general more than pain. Bentham's views were almost similar to Smith's egoism.

Bentham's utilitarian philosophy had a great influence on Ricardo. Ricardo received utilitarian philosophy through James Muller (a student of Ricardo in political economy). So Bentham said, "I'm Mueller's spiritual father, so Ricardo is my spiritual grandson." Ricardo, who accepted Bentham's utilitarian philosophical ideas, was in fact tantamount to accepting "egoism." He wrote that "under a system of complete freedom of commerce, it is inevitable that all countries will use their capital and labour for the most beneficial purposes of their own country." This pursuit of individual interests is well combined with the general happiness of the whole." This is the "invisible hand".

Based on the above understanding, Ricardo must advocate the market economy, he believes that free competition ensures the combination of individual interests and social interests, and also opens up possibilities for the endless development of productive forces. He opposed government intervention in economic life, stressing that any government intervention in economic life would be contrary to the "principle of the greatest happiness of the greatest majority." For example, he believes that the level of wages should follow the law of supply relations and be regulated by the market. "Wages, like other contracts, should be determined by fair and free competition in the market, and must never be ruled by the intervention of the legislature," he said. He argued that capital should flow freely so that it could be optimally and efficiently allocated. He said: "For the sake of general prosperity, the facilitation of the transfer and exchange of various kinds of property will not be too great, for in this way capital can flow into the hands of those who are most adept at using it to increase state production".

Ricardo was concerned with the development of the productive forces, in the words of Marx, "he wanted to produce for the sake of production." Ricardo believes that capitalists, in developing production, pursue personal interests, that is, profits. But profit is for accumulation, for the development of productive forces. In Ricardo's view, the industrial bourgeoisie is the representative of the advanced productive forces, and as long as it can increase the profits of the capitalists and promote the development of the productive forces, even at the expense of the interests of the working class, the interests of the landlord class are not spared.

Ricardo's method of study is abstraction. This was highly affirmed by Marx, who wrote in the preface to the first edition of Capital that the analysis of economic forms could not be done using either microscopes or chemical reagents. Both must be replaced by "abstract forces." The process of abstraction is the process of abstracting categories, laws, and internal logical connections from a bunch of disorganized materials, and it is the process of forming a theoretical system that has risen to a higher level. Marx wrote that he shouted to science: "Stand still." The basis and point of departure of the physiology of the bourgeois system— the understanding of the intrinsic organic connection of this system and the course of life—is that value determines labour time.

From this point of view, Ricardo compels science to abandon its old stereotypes and to make it clear to science the other categories it elucidates and proposes—relations of production and exchange—and on this basis, whether this starting point is appropriate or to what extent,......。 Ricardo's great historical significance in science is also here, and the abstract research method can summarize the categories and general laws of the research object.

E. Ray Canterbury, a well-known expert in the history of economic thought, in his "Brief History of Economics", believes that Ricardo's contribution to economics is one of his abstract methods; The second is income distribution; The third is the theory of international trade. The living reality has been abstracted and simplified under Ricardo's pen. In fact, in Ricardo's thought, there are no concrete people, only idealized things. In Adam Smith's happy writings there are diligent, flesh-and-blood workers busy with a professional division of labor, astute, shrewd businessmen who are maximizing profits. Ricardo's abstraction made these diverse and vivid economic phenomena simple, just as later economic research assumed other conditions were unchanged.

3. Ricardo's theory of value

Classical economics has put forward and adhered to the labor theory of value, which may be the era in which classical economics is in urgent need of prosperity, and it is necessary to answer the source of wealth. After classical economics, there was the factor theory of value (represented by Jean Say in France) and the subjective utility value theory (represented by the Austrian School of Pombavik).

Smith believed that labor was the true measure of the exchange value of all commodities. He said: "Whether a person is rich or poor depends on the extent to which he can enjoy the necessities, conveniences and entertainment of life." But since the division of labour has been fully established, only a very small part of the goods needed by each person depends on his own labor, and the largest part depends on the labor of others. Therefore, whether he is rich or poor depends on how much labor he can control. For a man who possesses a certain goods but does not want to consume them himself, but is willing to exchange them for the goods of others, the value of these goods is equal to the amount of labour which he can buy or dispose of. Labour, therefore, is the true measure of the exchange value of all commodities. Smith distinguished between use value and value, but did not distinguish between value and exchange value, between labor and labor.

Ricardo further developed Smith's theory that labor determines value, and his analysis of commodity value began with a discussion of Smith's theory of value. Ricardo's distinction between use value and exchange value was a step further than Smith's. Smith emphasized that exchange value is not determined by use value, arguing that goods that have no utility also have exchange value. Actual use value is indispensable for exchange value. Ricardo pointedly pointed out that "if a commodity is utterly useless, or which in any respect does not contribute to the satisfaction of our desires, it will not have an exchange value, no matter how much it lacks, no matter how much labor it requires when acquired (Principia, p. 7)." Ricardo is in fact a material bearer of use-value as exchange-value. That's right.

After explaining the use value and exchange value of goods, Ricardo turned to how exchange value is determined. In his view, there are two kinds of commodities, and the value of one commodity is determined solely by their scarcity. Since these commodities cannot be increased in number by human labour, their value cannot be diminished by an increase in supply. Items that fall into this category include rare statues, drawings, ancient books, antiques, and treasured wines. Ricardo argues that the "value" of such substances has nothing to do with the quantity of labour necessary for later production, but only with the ever-changing wealth and hobbies of those who wish to acquire them." Ricardo believes that in the daily exchange of the market, there are very few of the above commodities, and the vast majority of commodities can be continuously produced by human labor, so that the value of this part of the commodity is determined by the necessary labor time of society. However, the socially necessary labour time here is not the labour time necessary for the production of a certain use value by the average social proficiency and intensity of labour under the existing conditions of normal social production, when Marx spoke of industrial production. The socially necessary labour time here refers to the labour time required to produce a commodity under the most adverse conditions. Ricardo mistakenly extended the socially necessary labour time under the conditions of agricultural production to industry.

Since there is no distinction between labor and labour-power, value and exchange value, the transformation of surplus-value into profit, the conversion of profit to average profit, and thus the inability to answer the question of why wine is expensive for a long time, the believers of Ricardo who are trying to defend the labor theory of value claim that natural forces also have labor, and unconsciously stand with those who oppose the labor theory of value, which eventually leads to the disintegration of Ricardian theory.

Marx criticized the vulgar economist's defense of Ricardo's labor theory of value, that is, natural forces are also working, and thus led to the bankruptcy of Ricardo's labor theory of value. In real economic life, some economists oppose how to adhere to the labor theory of value under the condition that the organic composition of capital is greatly improved, which has repeated McCulloch's re-orbit. Say that the computer is an extension of the human brain, the manipulator is an extension of the human hand, they are all working. They do not understand that labor is exclusive to man (see Capital, vol. I, p. 78, The process of labour and the process of increasing value).

(The author is a member, professor and doctoral supervisor of the Research Center for Socialist Political Economy with Chinese Characteristics, Chinese Min University)