David Ricardo

Who was he: David Ricardo, often credited with systematizing economics, was a very influential classical economist, a Member of the British Parliament, businessman, financier and speculator. The law of comparative advantage, a fundamental argument in favor of free trade among countries and of specialization among individuals, was arguably the most important contribution he made to
economics.

Ricardo reasoned that there are mutual advantages from trade, even if one party is more productive in every capacity than its trading counterpart, as long as each focuses on the activities where it has a comparative productivity advantage.

Another of Ricardo's primary contributions is his theory of rents. He explained that the more land was cultivated, the more often farmers would have to start utilizing less productive land. Since a bushel of corn from less productive land sells for the exact price as a bushel from highly productive land, tenant farmers would be willing to pay more for highly productive land, the results being that the landowners, not the farmers, are the ones gaining from productive land.

Background: David Ricardo was born on April 19th, 1772 in London, England, the third of 17 children. At 21, Ricardo eloped with a Quaker, which led to the estrangement of his family. His father repudiated him and his mother ceased speaking with him. Without the support of his family, he started his own business as a stockbroker and became quite successful.

More