• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

david ricardo

Extracts from this document...

Introduction

Explain how Ricardo's economic theories provided the essential theoretical critique of the Corn Laws. * Introduction David Ricardo was born in London on 19th April 1772, son of Jewish merchant-banker from Holland; Ricardo joined his father as a stockbroker at the age of 14. When Ricardo married to a Quaker, his father cut him up from the business. Ricardo became a Unitarian and at the age of 22 with a capital of �800 with the support of financial community, he became an independent stockbroker. He was also known to be the successful businessmen, who retired at 42 with a fortune of approximately �1 million and established himself as a landowner. Ricardo was an independent member of the parliament from 1819 until his death. During his time, he supported a tax on capital to pay off the national debt; currency reform; abolition of Corn Law. * The Corn Laws In 1804, Corn Law was first introduced in Britain because of the landowners at that time who elected in the parliament thought to have protected their profits by imposing a duty on the imported corn. During the war period, it was very hard to import corn from Europe. This result to an expansion of British wheat and because of the shortage of bread prices was touching the sky. ...read more.

Middle

When population of a certain area rises, more food is required and less land is planted. Rent is the difference in the price of wheat per acre between the superior and inferior productive land. As population grows, rent increases with capitals profits and labours wages. Landlords and capitalist were necessary enemies. Ricardo explained that due to increase in the population rate, farmers should also prefer less productive land. According to Ricardo's experience, a bushel of corn which was from a less productive land should sold for the same price as a bushel of corn produced from a highly productive land. Therefore, tenant farmers would have to pay more to rent the highly productive land. This means there is no absolute rent i.e.-e rent paid for cultivating land of the poor quality. The rent that is differential rent which is paid to the owner for the use of superior quality land, as farmers prefer land of increasing inferior quality under cultivation. The rent as a whole goes to the owner of the land resulting in the landowner making a profit and the farmer actually losing money by paying to much rent. "Rent is that portion of the earth, which is paid to the landlord for the use of the original and indestructible powers of the soil." ...read more.

Conclusion

He also argued that two nations could both benefit from trade if each has either comparative or relative advantage. This means that the ratio of labour used in two goods will be different between two countries, in a way that each country will have one good where the labour of the production of commodity will be less then the other county. * Conclusion In conclusion, by discussing the theories we can see that a rise in population affect wages in the same way it affects rent. An increase in population results in rent to increase because less fertile land must be cultivated in order to provide the necessity of food for the people. There fore the land with the higher value must pay a rent that is equal to the difference between the produces of higher and the lesser valued land. Similarly, a country should become specialised in products and services in which they have a comparative advantage. They should then trade with other countries that have products in which that country also has a comparative advantage. If so both countries will be, better off and continue to grow in wealth and financial status. I think Ricardo's theory plays a significant role with in the corn laws as according to Ricardo country must be allowed to trade free of duty with foreign countries in order to maximise their capital. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our University Degree Applied Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related University Degree Applied Economics essays

  1. Economic analysis and PESTLE for a London hotel and restaurant.

    spending power of the people and affecting our sales negatively.www.bighospitality.co.uk Political issues affecting the business is ensuring all licenses required are put into places, this include opening and closing times of facilities, health and safety -fire exists. www.directgov.uk Summary: From the above pestle we can clearly see that political and

  2. Crisis kills forecasting and classic theories of economics

    So it is not surprising that the majority of forecasting professionals are working in money-related fields as investment advisers, marketing trend predictors, government policy decision advisers, to name the few. Today the predicting business is a multi-billion industry that employs hundreds of thousands of people.

  1. An analysis of British Airways environment

    Economic * Exchange rates British Airways is an international business; therefore they are potentially vulnerable to fluctuations within the exchange rates. It is mostly due to the strength of the pound meaning that less foreign customers will fly with British Airways and perhaps would go for another airline where it is cheaper.

  2. What (economic) problems would Iceland experience from the early transition to a fossil-free economy?

    Power derived from 1 kg of hydrogen roughly compares with power carried by 1 gallon of regular gasoline, which means the hydrogen cost at pump needs to be squeezed to about a third of the current level to become competitive (Rajeshwar, McConnell, Licht, 2008).

  1. Explain the impact of foreign multinational enterprises on the British economy?

    This was particularly true in the case of the car industry which would provide parts which would be cheaper to buy rather than produce by the large car manufacturers (Jones, 1996). MNCs might have provided much employment in Britain but the quality of that employment must also be taken into account (Jones, 1996).

  2. Internal Labour Markets

    On the other hand, segmentation theories emphasize the "fragmented" nature of the labour market and the importance of social and institutional factors on determining salaries and levels of employment. In practice, it shifts the emphasis from labour supply factors to labour demand factors.

  1. Transport Economics

    Summary resources: giving overall measure of the projects performance in cost-benefit terms. a. Accept all projects with positive Net present value (NPV) b. Where there are mutually exclusive options or alternatives accept the project with the higher NPV CBA could be used to rank policies on the basis of their improvements or reductions in well-being.

  2. Eu Expansion and its impact

    Europe comprising of the four constituent countries; England, Scotland, Wales and Northern Ireland. It includes the island of Great Britain. The population is estimated to 60,776,238 (July 2007 est.) Germany As Europe's largest economy and second most populous nation, Germany is a key member of the continent's economic, political, and defence organisations.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work