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

David Ricardo

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David Ricardo
Age: 50 †
Born: 1772
Born: April 19
Died: 1823
Died: January 1
Economist
Philosopher
Politician
Stockbroker
London
England
Equations
Wages
Idle
Factors
Falling
Capacity
Fall
Left
Equation

More quotes by David Ricardo

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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.
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Profits are not made by differential cleverness, but by differential stupidity.
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Utility then is not the measure of exchangeable value, although it is absolutely essential to it.
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The farmer and manufacturer can no more live without profit than the labourer without wages.
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Gold, on the contrary, though of little use compared with air or water, will exchange for a great quantity of other goods.
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A rise in wages, from an alteration in the value of money, produces a general effect on price, and for that reason it produces no real effect whatever on profits.
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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.
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Every transaction in commerce is an independent transaction.
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Called an inquiry into the laws which determine the division of the produce.
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If a commodity were in no way useful, - in other words, if it could in no way contribute to our gratification, - it would be destitute of exchangeable value, however scarce it might be, or whatever quantity of labour might be necessary to procure it.
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Taxation under every form presents but a choice of evils.
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It appears to me that one great cause of our difference in opinion on subjects which we often discuss is that you have always in mind the immediate and temporary effects of particular changes, whereas I put these effects quite aside, and fix my whole attention on the long-term effects that will result from them.
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But a rise in the wages of labour would not equally affect commodities produced with machinery quickly consumed, and commodities produced with machinery slowly consumed.
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Nothing contributes so much to the prosperity and happiness of a country as high profits.
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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.
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A rise of wages from this cause will, indeed, be invariably accompanied by a rise in the price of commodities but in such cases, it will be found that labour and all commodities have not varied in regard to each other, and that the variation has been confined to money.
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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.
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It has therefore been justly observed that however honestly the coin of a country may conform to its standard, money made of gold and silver is still liable to fluctuations in value, not only to accidental, and temporary, but to permanent and natural variations, in the same manner as other commodities.
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The exchangeable value of all commodities rises as the difficulties of their production increase.
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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.
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