The 19th of April was David Ricardo’s birthday. Or at least it would have been were he still alive. The classical economist has been dead for nearly 200 years, but his insights and theories remain immeasurably valuable today.
Yet Ricardo was, in many ways, an unlikely economist.
Born into a large Sephardic Jewish family, he received little formal education, instead joining his father on the London Stock Exchange at the age of 14. Ricardo is rare amongst economists in amassing a vast personal fortune, largely due to a series of canny speculations on the stock market. His interest in economics was sparked by a chance reading of The Wealth of Nationsduring his late twenties. Compared with Smith, his near-contemporary, Ricardo’s life and works remain relatively obscure, but his contribution to economics was immense.
What is perhaps most remarkable about Ricardo’s work is his ability to articulate nuanced and elegant concepts in an entirely theoretical way, anticipating the complex equations and modelling that now dominate economics. As Professor David Friedman puts it, the modern economist reading Ricardo’s Principles of Political Economy “feels rather as a member of one of the Mount Everest expeditions would feel if, arriving at the top of the mountain, he encountered a hiker clad in T-shirt and tennis shoes.”
Ricardo was an early proponent of a Land Value Tax, one of those rare ideas which finds favour with economists across the political spectrum. Himself a landlord, Ricardo’s “Law of Rent” explained how landowners are able to monopolise the gains from economic growth. Ricardo understood that much of the value of land exists due to conditions that have nothing to do with the landowner’s effort or expense — often, far more to do with other people’s labour, and the good fortune of where it happens to be situated. He viewed unearned income derived from land as a harmful anomaly: “that portion of the produce of the earth which is paid to the landlord for the use of the original and indestructible powers of the soil”.