Key Concepts

Argument Explanation
Labor Theory of Value Ricardo argued that the value of a commodity is determined by the labor required to produce it. He believed that the value of a commodity is derived from the labor expended during its production, including the labor required to produce the raw materials, machinery, and tools used in the manufacturing process.
Comparative Advantage Ricardo introduced the concept of comparative advantage, which states that even if a country has an absolute advantage in the production of all goods, it should still specialize in producing goods where it has a comparative advantage (i.e., where it has the lowest opportunity cost) and trade for other goods. This principle forms the basis of international trade and specialization.
Rent Theory Ricardo developed a theory of rent, which explains the payment made to landowners for the use of their land. He argued that the rent of land is determined by its fertility and location relative to markets. The most fertile and well-located land commands the highest rent, while less fertile and remote land commands lower rent or no rent at all.
Subsistence Wage Theory Ricardo believed that wages would tend to settle at a level just sufficient to allow workers to subsist and perpetuate their labor supply. He argued that any increase in wages above the subsistence level would lead to an increase in population, which would then drive wages back down to the subsistence level.
Diminishing Returns Ricardo argued that as more labor and capital are applied to a fixed amount of land, the returns to those inputs will eventually diminish. This principle of diminishing returns in agriculture explained why the most fertile land would be cultivated first and why less fertile land would be brought into cultivation as population and demand for food increased.

Quotes

Chapter Quote
Chapter 1: On Value "The value of a commodity, or the quantity of any other commodity for which it will exchange, depends on the relative quantity of labour which is necessary for its production, and not on the greater or less compensation which is paid for that labour."
Chapter 7: On Foreign Trade "Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each. This pursuit of individual advantage is admirably connected with the universal good of the whole."
Chapter 31: On Machinery "The opinion, that the employment of machinery is detrimental to the interests of the labouring class, is therefore equivalent to the opinion, that the formation of capital is unfavourable to them; a doctrine, which can be defensible only in the most paralysed condition of society."

Contents

Chapter Title Summary
1 On Value Explains the concept of value, separating use-value from exchange-value, and introduces the labor theory of value.
2 On Rent Discusses the theory of rent based on agricultural produce and the differential fertility of land.
3 On the Rent of Mines Extends the theory of rent to mines, stating that mines also yield rent based on their productivity compared to the least productive mine.
4 On Natural and Market Price Distinguishes between natural price and market price, explaining how market prices gravitate towards natural prices over time.
5 On Wages An analysis of the factors influencing wages, arguing that wages tend to be at a subsistence level due to population growth.
6 On Profits Explores the relationship between profits and wages, establishing the inverse relationship where high wages result in low profits and vice versa.
7 On Foreign Trade Introduces the concept of comparative advantage, emphasizing the benefits of international trade.
8 On Taxes Examines different forms of taxation, their effects on different classes, and their overall impact on the economy.
9 Taxes on Raw Produce Analyzes the implications of taxes on raw produce, suggesting that they raise prices and reduce profits.
10 Tithes Discusses the impact of tithes, or taxes on agricultural produce, on rent, profit, and price of produce.
11 Taxes on Rent Argues that taxes on rent do not affect the price of goods but fall entirely on the landlord.
12 Taxes on Gold Examines how taxing gold production influences its prices and the broader economic implications.
13 Taxes on Houses Considers the effects of taxes levied on residential properties, on both the economy and individuals.
14 Taxes on Profits Explores the incidence of taxes on profits, concluding they do not affect wages but fall on capitalists.
15 Taxes on Wages Discusses how taxes on wages are shifted, primarily affecting employers and the cost of production.
16 Tithes, Utility, and Beau Nash Further examination of the effects of tithes on the economy and society, with specific examples.
17 Taxes on Commodities Analyzes the incidence of indirect taxes on commodities and their effect on prices and consumption.
18 Poor Rates Investigates the economic burden of poor rates (taxes used to support the poor) and their impact on wealth distribution.
19 On Sudden Changes in Trade Discusses the economic dislocation caused by sudden changes in trade patterns and markets.
20 Value and Riches, Their Distinct Properties Differentiates between value and riches, arguing that they are not synonymous and have different implications for economic analysis.
21 Effects of Accumulation on Profits and Capital Considers the impact of capital accumulation on profits, suggesting that increased capital lowers profits over time.
22 On Machinery Evaluates the effects of technological improvements and machinery on employment, wages, and the economy.
23 On Profits Immaterial Whether Exchanged at Home or Abroad Argues that the source of profits remains unchanged whether goods are exchanged domestically or internationally.
24 Mr. Malthus's Opinions on Rent Critiques Malthus's views on rent, emphasizing Ricardo's own theories and counterarguments.
25 On Colonial Trade Examines the economic relations between colonies and the mother country, arguing for the benefits of free trade over mercantilism.
26 On Gross and Net Revenue Distinguishes between gross revenue and net revenue, highlighting their significance in economic planning and taxation.
27 On Currency and Banks Discusses the role of currency and banking systems in stabilizing or destabilizing the economy.
28 On the Comparative Value of Gold, Corn, and Labour in Rich and Poor Countries Analyzes how the value of gold, agricultural produce, and labor differ between wealthy and poor nations.
29 Taxes Paid by Producers Explores how taxes levied on producers affect the cost of production and, consequently, market prices.
30 On the Influence of Demand and Supply on Prices Analyzes the basic economic principle of demand and supply and its effect on market prices.
31 On the Subject of Money Detailed discussion on money, its functions, and its pivotal role in economic exchanges.
32 Concluding Remarks Summarizes the main arguments of the book and reflects on the implications of his economic theories.