Reception and Impact
According to Keynes (CW VII: 32), “Ricardo conquered England as completely as the Holy Inquisition conquered Spain. Not only was his theory accepted by the city, by statesmen and by the academic world.
But controversy ceased” - meaning that Malthus’ alternative theory of effective demand ceased to be discussed. This contention cannot be sustained. Soon after Ricardo’s death his influence in England began to dwindle (Blaug 1958). With the advent of the “marginal” method, Ricardo’s different surplus-based approach to the problem of value and distribution actually began to meet with serious problems of understanding as can be seen by the misapprehension of his theory by major marginalist economists. What can be said, however, is that there are few economists who had a comparable impact on the development of political economy. For a study of the reception of Ricardo’s doctrine in continental Europe and Japan, see Faccarello and Izumo (2014).About Ricardo opinions differed sharply across time and space. Besides glowing admirers we encounter ardent critics. To Karl Marx (1968: 166) Ricardo was the last great representative of classical political economy, who is to be credited with having laid the “basis, the starting-point for the physiology of the bourgeois system - for the understanding of its internal organic coherence and life process”. William Stanley Jevons (1871 [1965]: xlivi and li) called Ricardo an “able but wrongheaded man [who] shunted the car of economic science on to a wrong line” and based his analysis on “mazy and
preposterous assumptions”. Leon Walras ([1874] 1954) praised Ricardo’s theory of rent, but criticized the fact that the underlying principle of scarcity had not been generalized from land to all factors of production, including labour and capital. He also completely failed to grasp the different analytical structure of Ricardo’s theory (see Kurz and Salvadori 2002).
Alfred Marshall (1890 [1977]: 629, 416-17) praised Ricardo’s “strong constructive originality [which] is the mark of the highest genius in all nations” and insisted “that the foundations of the theory [of value] as they were left by Ricardo remain intact”, boldly re-interpreting Ricardo in terms of his own demand and supply approach. Among the marginalist writers Knut Wicksell was perhaps the one who understood best Ricardo’s surplus approach to an explanation of profits and observed: “Since, according to Ricardo, wages represent a magnitude fixed from the beginning,... [i]t is neither possible nor necessary to explain capital profit in other ways” (Wicksell 1893 [1954]: 36-7). He added that “Ricardo’s theory of value is... developed with a high degree of consistency and strictness” (ibid.: 40). The Austrian economists, especially Eugen von Bohm-Bawerk, objected that not cost of production but utility - more precisely: marginal utility - is the principle that regulates value. In equilibrium, however, Bohm- Bawerk insisted, relative prices are strictly proportional to relative labour costs - a result he could only reach by reckoning with simple interest, when, as Ricardo was clear, compound interest was strictly necessary.Ricardo is considered a founder of a rigorous analytics in economics. Shortly after Ricardo’s death we see attempts to formalize his theory. The first authors in this regard were William Whewell and John Edward Tozer, later followed Vladimir K. Dmitriev (1904 [1974]) and Ladislaus von Bortkiewicz (1906-07) and in more recent times Paul Samuelson (1959), Luigi Pasinetti (1960) and Michio Morishima (1989; see also Kurz and Salvadori 1992). See also Kaldor (1956.)
The most important reconsideration, reformulation and revival of the classical and especially Ricardian intellectual heritage we owe to Piero Sraffa. His edition (with the collaboration of Maurice H. Dobb) of The Works and Correspondence of David Ricardo (1951-73) triggered a thorough re-engagement with the doctrines of Ricardo and the classical economists.
Sraffa’s introduction to volume I and his 1960 book clarified the specific logical structure of the classical theory of value and distribution and demonstrated that it was fundamentally different from the later marginalist (or “neoclassical”) theory. He also showed that the theory can be formulated in a consistent way and does not stand or fall with the labour theory of value. Starting from his new interpretation and formalization of the classical theory of value and distribution, several authors have developed it in various directions; for an overview, see, for example, Kurz and Salvadori (1995).Sraffa’s Ricardo edition was widely considered an editorial masterpiece and earned him in 1961 the golden Soderstrom medal of the Royal Swedish Academy of Sciences. Sraffa’s surplus-based interpretation of the classical theory of value and distribution at first met with almost unanimous approval. Only when it gradually transpired, especially after the publication of his 1960 book, that it implied a radical break with the Whig history of economics according to which there was continuous progress of the subject from its early beginnings to its modern pronouncements, that opposition arose. John Hicks, Paul Samuelson (1978) and particularly Samuel Hollander (1979) tried to counter Sraffa’s new view and interpreted Ricardo again essentially in the received Marshallian mould as an advocate of demand and supply theory with the demand side still in its infancy. The revisionist point of view was criticized, among others, by Krishna Bharadwaj, John Eatwell, Alessandro Roncaglia, Giancarlo de Vivo and particularly Pierangelo Garegnani (2007). Mark Blaug variously attacked what he called the “Sraffians”, but in a controversy with Garegnani, Kurz and Salvadori eventually opined that the difference between his interpretation and theirs was only “a question of emphasis” (Blaug 2009: 232). Terry Peach (1993) attacked Hollander’s view from a non-Sraffian angle, but was also critical of certain elements of Sraffa’s interpretation.
For a critical account of the debates, see King (2013: chs 7, 8) and Mongiovi in Kurz and Salvadori (2015).Remarkably, even nowadays Ricardo’s work is still capable of stirring debates about the foundations of economics to which leading representatives of the subject contribute. Could there be some better evidence on behalf of the lasting importance of his contribution? Maria Edgeworth, a writer and friend of the Ricardos, deserves the final word about the most classical of all classical authors:
I never argued or discussed a question with any person who argues more fairly or less for victory and more for truth. He gives full weight to every argument brought against him, and seems not to be on any side of the question for one instant longer than the conviction of his mind on that side. It seems quite indifferent to him whether you find the truth, or whether he finds it, provided it be found (Works X: 168-9).
Heinz D. Kurz
See also:
British classical political economy (II); Bullionist and anti-bullionist schools (II); Growth (III); International trade (III; Thomas Robert Malthus (I); Karl Heinrich Marx (I); Money and banking (III); Paul Anthony Samuelson (I); Adam Smith (I); Piero Sraffa (I).