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The factors left out of the Ricardian equation are falling wages and idle capacity.

David Ricardo

There can be no rise in the value of labour without a fall of profits.
DAVID RICARDO

Fall Labour Profit Rise Value
No extension of foreign trade will immediately increase the amount of value in a country, although it will very powerfully contribute to increase the mass of commodities and therefore the sum of enjoyments.
DAVID RICARDO

Commodity Enjoyment Increase Trade Value
Gold and silver, like other commodities, have an intrinsic value, which is not arbitrary, but is dependent on their scarcity, the quantity of labour bestowed in procuring them, and the value of the capital employed in the mines which produce them.
DAVID RICARDO

Commodity Employment Gold Production Quantity Silver Value
If English money was of the same value then as before, Hamburgh money must have risen in value. But where is the proof of this?
DAVID RICARDO

Evidence Money Rise Value
There is no way of keeping profits up but by keeping wages down.
DAVID RICARDO

Profit Wage Way Yourself
After all the fertile land in the immediate neighbourhood of the first settlers were cultivated, if capital and population increased, more food would be required, and it could only be procured from land not so advantageously situated.
DAVID RICARDO

Cultivate Fertile Land Population Requirement Situation
Whenever, then, the usual and ordinary rate of the profits of agricultural stock, and all the outgoings belonging to the cultivation of land, are together equal to the value of the whole produce, there can be no rent.
DAVID RICARDO

Belong Ordinary Production Profit Rate Togetherness Value
It is not by the absolute quantity of produce obtained by either class, that we can correctly judge of the rate of profit, rent, and wages, but by the quantity of labour required to obtain that produce.
DAVID RICARDO

Absolute Production Quantity Rate Requirement
If a tax on malt would raise the price of beer, a tax on bread must raise the price of bread.
DAVID RICARDO

Beer Food Price Raise Tax
To alter the money value of commodities, by altering the value of money, and yet to raise the same money amount by taxes, is then undoubtedly to increase the burthens of society.
DAVID RICARDO

Commodity Doubt Increase Money Value
Every transaction in commerce is an independent transaction.
DAVID RICARDO

Commerce Independent Transaction
But it is clear that the price of labour has no necessary connection with the price of food, since it depends entirely on the supply of labourers compared with the demand.
DAVID RICARDO

Clear Compare Connection Demand Labor Necessary Price
There can be no greater error then in supposing that capital is increased by non-consumption.
DAVID RICARDO

Consumption Errors Greatness Increase
The price of corn will naturally rise with the difficulty of producing the last portions of it.
DAVID RICARDO

Natural Portion Price
I have already expressed my opinion on this subject in treating of rent, and have now only further to add, that rent is a creation of value, as I understand that word, but not a creation of wealth.
DAVID RICARDO

Creation Expression Opinion Subject Understand Wealth
But a tax on luxuries would no other effect than to raise their price. It would fall wholly on the consumer, and could neither increase wages nor lower profits.
DAVID RICARDO

Consume Effect Fall Luxury Price Profit Tax

The factors left out of the Ricardian equation are falling wages and idle capacity.

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The factors left out of the Ricardian equation are falling wages and idle capacity.

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