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

David Ricardo

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
Profits are not made by differential cleverness, but by differential stupidity.
DAVID RICARDO

Clever Different Profit Stupidity
Nothing contributes so much to the prosperity and happiness of a country as high profits.
DAVID RICARDO

Contribute Country Happiness Prosperity
If the demand for home commodities should be diminished, because of the fall of rent on the part of the landlords, it will be increased in a far greater degree by the increased opulence of the commercial classes.
DAVID RICARDO

Class Commercial Commodity Degree Demand Greatness Home
Money is neither a material to work upon nor a tool to work with.
DAVID RICARDO

Material Money Tools Work
It is here we come to the heart of the matter. The economic principle of comparative advantage’, ‘a country may, in return for manufactured commodities, import corn even if it can be grown with less labour than in the country from which it is imported.
DAVID RICARDO

Advantage Economics Growth Heart Import Manufacture Principle
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
Again two manufacturers may employ the same amount of fixed, and the same amount of circulating capital; but the durability of their fixed capitals may be very unequal.
DAVID RICARDO

Capital Equality Fix Man
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
Every transaction in commerce is an independent transaction.
DAVID RICARDO

Commerce Independent Transaction
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
Neither machines, nor the commodities made by them, rise in real value, but all commodities made by machines fall, and fall in proportion to their durability.
DAVID RICARDO

Commodity Fall Machine Reality Value
Whenever the current of money is forcibly stopped, and when money is prevented from settling at its just level, there are no limits to the possible variations of the exchange.
DAVID RICARDO

Current exchange Money Prevent Variation
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
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
There can be no greater error then in supposing that capital is increased by non-consumption.
DAVID RICARDO

Consumption Errors Greatness Increase
Profits might also increase, because improvements might take place in agriculture, or in the implements of husbandry, which would augment the produce with the same cost of production.
DAVID RICARDO

Agriculture Husband Improvement Profit
The price of corn will naturally rise with the difficulty of producing the last portions of it.
DAVID RICARDO

Natural Portion Price
If then the prosperity of the commercial classes, will most certainly lead to accumulation of capital, and the encouragement of productive industry; these can by no means be so surely obtained as by a fall in the price of corn.
DAVID RICARDO

Capital Class Commercial Encouragement Prosperity
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
Like all other contracts, wages should be left to the fair and free competition of themarket, and should never be controlled by the interference of the legislature.
DAVID RICARDO

Competition Contract Control Freedom Legislature Wage
The exchangeable value of all commodities rises as the difficulties of their production increase.
DAVID RICARDO

Commodity exchange Increase Production Value
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
There is no way of keeping profits up but by keeping wages down.
DAVID RICARDO

Profit Wage Way Yourself
During the period of capital moving from one employment to another, the profits on that to which capital is flowing will be relatively high, but will continue so no longer than till the requisite capital is obtained.
DAVID RICARDO

Capital Employment Flow Move Relative
Taxation under every form presents but a choice of evils.
DAVID RICARDO

Choice Evil Option
Called an inquiry into the laws which determine the division of the produce.
DAVID RICARDO

Determination Division Law Production

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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