capitalism

Ricardo, David (1772–1823) 433
had met the tests of Sidney, Locke, and John Milton,
who believed that the overthrow of governments
required significant justification, requiring “a long train
of Abuses, Prevarications, and Artifices,” as Locke
wrote. In such instances, he maintained, people have as
much right to overturn their government as a ship’s passengers
do to mutiny when the captain of their vessel,
despite contrary winds, leaks, and low supplies, steers
them into a hurricane.
Because neither ruler nor ruled should be subject to
arbitrary action, singular instances of government injustice
should be met with personal resistance instead of revolution.
Good governments listen to the governed and revise
unjust laws. Political authorities “who know the frailty of
human nature will always distrust their own,” Sidney contended,
“and desiring only to do what they ought, will be
glad to be restrained from that which they ought not to do.”
Likewise, people tend to restrain themselves from rash
action. “Revolutions happen not upon every little mismanagement
in publick affairs,” Locke maintained, for even
“great mistakes” of rulers will be endured by the people
“without mutiny or murder.” Only when regimes ignore or
outlaw all criticism, public protest, and other forms of resistance
may the people turn to violent resistance.
If these theorists are correct, then one of the most powerful
safeguards of individual rights—as well as of law and
order—is a society’s recognition of the right of revolution.
The public’s willingness to exercise this right discourages
government officials from ignoring their most basic obligations
to the governed.
See also American Revolution; Glorious Revolution; Jefferson,
Thomas; Locke, John; Secessionism
Further Readings
RMD
Bailyn, Bernard. The Ideological Origins of the
American Revolution. Cambridge, MA: Harvard University
Press, 1967.
Brooks, David L., ed. From Magna Carta to the Constitution:
Documents in the Struggle for Liberty. San Francisco: Fox &
Wilkes, 1993.
Locke, John. Two Treatises of Government. Cambridge: Cambridge
University Press, 1988.
Rossiter, Clinton. Seedtime of the Republic: The Origin of the
American Tradition of Political Liberty. New York: Harcourt,
Brace, 1953.
Sidney, Algernon. Discourses Concerning Government. Indianapolis,
IN: Liberty Fund, 1990.
Trenchard, John, and Thomas Gordon. Cato’s Letters or Essays on
Liberty, Civil and Religious, and Other Important Subjects.
Indianapolis, IN: Liberty Fund, 1990.
Tuck, Richard. Natural Rights Theories: Their Origin and
Development. Cambridge: Cambridge University Press, 1979.
RICARDO, DAVID (1772–1823)
David Ricardo was a brilliant classical economist. His policies
of free trade and hard money helped propel Britain into
its role as “workshop of the world” and as an industrial
giant, yet his labor theory of value and antagonistic model
of capitalism proved misguided and gave unexpected support
to the Marxists and socialists.
Born in London to a large Jewish family, Ricardo made
his fortune when a relatively young man as a stockbroker
on the London Stock Exchange. He was a speculator par
excellence, allegedly making a million pounds sterling in
1 day following the Battle of Waterloo. In 1815, he purchased
a large estate called Gatcomb Park in Gloucestershire and
devoted the remainder of his life to intellectual interests. In
1819, he was elected to Parliament. Four years later, at the
age of 51, he died suddenly of an ear infection.
In the 1810s, Ricardo wrote a series of essays and books
promoting laissez-faire. He argued that England’s raging
inflationary price spiral was caused by the Bank of England
issuing excessive bank notes to pay for the war against France.
Ricardo’s hard-money views eventually led to England adopting
the classical gold standard and 100% reserve gold backing
of its currency, with the Peel Act of 1844. He vigorously
attacked the Corn Laws, England’s notorious high tariff wall
on wheat and other agricultural goods, which was ultimately
repealed in 1846. He made profound contributions to economics,
including the laws of comparative advantage, diminishing
returns, and the quantity theory of money.
He is considered the inventor of abstract model building
in economics, creating a mathematical model with a few
simple variables, a technique used later by such diverse
economists as Karl Marx, John Maynard Keynes, Paul
Samuelson, and Milton Friedman.
But it was this abstract reasoning that also has been
called the “Ricardian Vice.” In his work On the Principles
of Political Economy and Taxation (1817), Ricardo created
an oversimplified “corn” model that led to an antagonistic
view of capitalism, where values are determined by labor
inputs and where wages can only increase at the expense of
profits. His analysis of the nature of production concluded
that wages tend toward subsistence levels, known as the iron
law of wages. Ricardo thought that over time, as the population
grew, an increased demand for food would have the
natural effect of raising its price, which would lead to an
increase in the value of labor. Yet any increase in the value
of labor, Ricardo concluded, must invariably lead to a fall in
profits. Ricardo’s dismal science, together with the doctrines
of his friend, Thomas Malthus, moved economics away
from Adam Smith’s invisible hand with its harmony of interests
and onto a path of class antagonism and exploitation,
giving ammunition to socialist and Marxist causes.
MaS