Introduction

The aims of this essay are twofold: (i) to understand Ricardo's economics in relation to other classical political economists, especially Smith, Sismondi and Malthus and (ii) to provide an alternative conceptual architecture for better understanding contemporary societies. Thus, it serves as a companion in the above two ways. While the locus of discussion is Ricardo's explanation of relative prices and income distribution (value theory), this shall be complemented by a discussion of his approach to economics and his theory of economic growth.

In Ricardo's index to the Principles, there are five entries on Malthus, one entry on Sismondi, and over 20 entries on Smith. Ricardo writes approvingly of Malthus for presenting ‘to the world … the true doctrine of rent’ and of Smith and Sismondi for having improved the ‘science’ of ‘Political Economy’ but notes that they have not grasped the principles of rent and therefore that of income distribution (Works, I, 5–6).

The essay is organized as follows. Section 2 highlights the role of value theory in Ricardo's political economy and for economics in general. Section 3 provides an overview of Ricardo's method. Section 4 outlines Ricardo's critical engagement with use value and exchange value. Section 5 discusses Ricardo's theory of value and distribution. Section 6 engages with Ricardo's growth theory and the role of demand therein. Section 7 offers a conclusion.

The Raison d’etre of Value Theory

Before stating the raison d’etre of value theory, it is necessary to present the aims or ‘objects’ of political economy as laid out by Smith.

In short, it may be stated that Smith envisioned political economy as a science which has at its core the enrichment of the people. Therefore, the determinants and growth of wages and profits constitute a central part of political economy.