Economics Dictionary of ArgumentsHome
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| Economy: Economy is the system of production, distribution, and consumption of goods and services within a society. It determines how resources are allocated and how goods and services are produced and distributed. See also Economics, Markets, Goods, Labour, Society._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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David Ricardo on Economy - Dictionary of Arguments
Rothbard II 82 Economy/Ricardo/Rothbard: In contrast to Adam Smith, for whom the output, or wealth, of nations was of supreme importance, Ricardo neglected total output to place overriding emphasis on the alleged distribution of a given product into macro-classes. Specifically, into the three macro-classes of landlords, labourers and capitalists. Thus, in a letter to Malthus, who on this question at least was an orthodox Smithian, Ricardo made the distinction clear: ‘Political economy, you think, is an enquiry into the nature and causes of wealth; I think it should rather be called an enquiry into the laws which determine the division of the produce of industry amongst the classes who concur in its formation.’ Since entrepreneurship could not exist in Ricardo's world of long-run equilibrium, he was left with the classical triad of factors. His analysis was strictly holistic, in terms of allegedly homogeneous but actually varied and diverse classes. Ricardo avoided any Say-type emphasis on the individual, whether he be the consumer, worker, producer or businessman. SchumpeterVsRicardo: In Ricardo's world of verbal mathematics there were, as Schumpeter has astutely pointed out, four variables: total output or income, and shares of income to landlords, capitalists, and workers, i.e. rent, profits (long-run interest) and wages. Problem: [Ricardo] had four variables, but only one equation with which to solve them: Total output (or income) = rent + profits + wages. To solve, or rather pretend to solve, this equation, Ricardo had to ‘determine’ one or more of these entities from outside his equation, and in such a way as to leave others as residuals. >Wages/Ricardo, >Rent/Ricardo, >Land/Ricardo, >Marginal costs/Ricardo, >Ricardian economics. Rothbard II 195 Money/Prices/Rocardo/Rothbard: For money to be strictly neutral to everything except a general level of prices, Ricardo had to assert a strict, radical dichotomization between the monetary and the real worlds, with values, relative prices, production and incomes determined only in the 'real' sphere, while overall prices were set exclusively in the monetary sphere. >Bullionism. RothbardVsRicardo: And never the two spheres could meet. And here began the fateful and all-pervasive modern fallacy of a severe split between two hermetically sealed worlds: the 'micro' and the 'macro', each with its own determinants and laws. Furthermore, as Salerno(1) writes, fit was Ricardo's strong affrmation of the neutral-money doctrine in his bullionist writings that was to serve as the source of the classical conception of money as merely a "veil" hiding the "real" phenomena and processes of the economy".(1) In particular, if money is neutral, then value, or relative prices, had to have only 'real' determinants, which Ricardo discovered in embodied quantities of labour. 1. Joseph Salerno, 'The Doctrinal Antecedents of the Monetary Approach to the Balance of Payments' (doctoral dissertation, Rutgers University, 1980), p. 447. Salerno goes on to point out that Ricardo's strict, mechanistic split between the money and the real, leading to the doctrine that money is a 'veil', led also to the seeming paradox of Ricardo, in his Principles, flip-flopping to a highly misleading purely real, non-monetary, 'barter' analysis of the balance of payments. The paradox is only seeming, for a severe split enables someone to leap back and forth between the purely monetary and the purely real. It was the barter analysis of Ricardo's Principles, Salerno notes, 'which served as the foundation for the classical theory of the balance of payments'. Ibid., p. 449._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
EconRic I David Ricardo On the principles of political economy and taxation Indianapolis 2004 Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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