David Smith- 'Free Lunch' (Pt. VI- On David Ricardo and John S. Mill)

Ricardo, a contemporary of Malthus, was one of the most revolutionary thinkers around the subject of international competitiveness with his ideas of both absolute and comparative advantages which can be demonstrated in PPF diagrams (see right)- he is world renowned for being the richest economist ever to live “in a profession that throws up relatively few millionaires”. For the example here, although China may have the absolute advantage (in that it can produce more cloth AND more shoes), it should produce at the point where it has the comparative advantage, as should India. This is because, if India is already better at making shoes than cloth, making more will simply make them more efficient and able to produce more, and vice versa. From this, Ricardo laid the foundations for some of the strongest arguments for free-trade. Smith then notes how important Ricardo’s ‘corn model’ was to Karl Marx in his development of both Capital and The Communist Manifesto. In this, one of the first major econometrical models, Ricardo concluded that the long term economic prospects for the world consisted of ‘Landlords’ gaining at the expense of the workers, leading to the eventual degradation of the economy as a whole (the last bit was mainly Marx, though).

Mill - as one of the great popularisers of economics- had his textbook Principals of Political Economy used as the standard text for economics students for the latter half of the 19^th Century, which in tandem with his edited version of Jeremy Bentham’s On Evidence, laid the fundamentals for what was to become the cost-benefit analysis from the idea of utilitarianism. Utilitarianism is the school of thought in which everyone can end up in a ‘Pareto’ (after French economist Vilfredo Pareto) situation in which nobody can end up better off without making others worse off.

Hey guys,

Apologies for the winter hiatus- you know how busy it gets! I hope you all had a great break, and are ready for some  more regular updates with some more progress from both my 'Free Lunch' review, and some other stuff that I've been working on in recent weeks. Also, for those studying A-level economics, I shall be producing some tips on how to answer questions and essays, alongside some other general essay writing tips!

Stay classy,

K