Elaborating “a very consistent theory”

Ricardo got to know James Mill and Thomas Robert Malthus. Mill, impressed by Ricardo’s sharpness and talent, incessantly urged him to write down his ideas and publish them. With Malthus, Ricardo engaged in numerous controversial discussions until the end of his life especially on the theory of value and distribution, the problem of what would be a good measure of value and the problem whether a general “glut” of commodities, that is, a lack of aggregate effectual demand, was possible.

Prompted by a move before Parliament to restrict the corn trade in early 1813, Ricardo started to investigate the impact of such a restriction on the accumulation of capital and on income distribution — the rents of land, the rate of profits and wages. He scrutinized critically Adam Smith’s doctrine and found it wanting. His efforts resulted in March 1814 in some “papers on the profits of Capital”, which unfortu­nately have never been found, and in February 1815 in the publication of his Essay on the Influence of a Low Price of Corn on the Profits of Stock; Shewing the Inexpediency of Restrictions on Importation. Thereafter the problem of income distribution in a developing economy was at the centre of Ricardo’s research agenda. The Essay laid the ground for Ricardo’s magnum opus, On the Principles of Political Economy, and Taxation, published in April 1817. The book sold out in a few months. A second, sub­stantially revised edition came out in 1819, and a third, containing the new chapter “On Machinery,” in which Ricardo responded inter alia to the movement of the Luddites, in 1821. Ricardo identified the “principal problem in Political Economy” to consist in unravelling the “laws” that regulate the distribution of the product between landown­ers, capitalists, and workers in conditions of changing relative scarcities of natural resources and changing technical conditions of production due to “improvements” (Works I: 5).