On the Principles of Political Economy and Taxation.

Ricardo, D. (1817). On the Principles of Political Economy and Taxation.

Type

Book

Intellectual base

Textbook

Year

1817

Link

https://www.gutenberg.org/files/33310/33310-h/33310-h.htm

Cited from

economics_finance, general, mathematics

Cited by

9 citations across 9 artifacts.

Each citation links to the sentence it supports in the citing article.

Primes

• Arbitrage (Generalized)
  • The deep structure here is the principle of comparative advantage that Ricardo (1817) developed in On the Principles of Political Economy and Taxation: even when one region is absolutely more productive across all activities, differential opportunity costs create gains from reallocation across the boundary.

    This sourceJohn Murray, London. Chapter 7 ("On Foreign Trade") develops the theory of comparative advantage with the canonical England-Portugal cloth-and-wine example: even when one country is absolutely more productive in both goods, both gain by specializing according to relative opportunity costs and trading. Extends Smith's intra-workshop partitioning logic to the international scale, where geographies become the differentiated performers and trade is the re-integration interface.

• Comparative Advantage
  • The essential commitment is that the relative efficiencies — not absolute ones — determine the welfare-improving pattern of production, and that trade based on comparative advantage is (under the standard assumptions) positive-sum, with each party better off after specialization and trade than in autarky.

    This sourceChapter 7 ("On Foreign Trade") develops comparative advantage with the canonical England–Portugal cloth-and-wine example (the 'four magic numbers': England 100 cloth / 120 wine, Portugal 90 cloth / 80 wine); shows both countries gain by specializing on relative opportunity costs even when one is absolutely more productive in both goods.

• Diminishing Returns (Law of)
  • for agricultural yields, developed by Ricardo (1817)

    This sourceDevelops the theory of rent (esp. Ch. 2 'On Rent'): as population grows and inferior soils are brought into cultivation, diminishing returns to land raise rents and lower profits; rent arises from differential fertility and location of soils.

• Division of Labor
  • Economics and economic history: Adam Smith's pin-factory analysis and the foundational role of division of labor in productivity growth; Ricardo (1817) extending the logic from inside the workshop to between nations through the theory of comparative advantage, where partitioning across geographies follows opportunity-cost differentials rather than absolute productivity.
• Exchange
  • Economics: Market trade, barter, contract, gains-from-trade, transaction costs as friction on the exchange process, comparative advantage as the gains-structure available to bilateral exchange between differently endowed parties; Ricardo's (1817) comparative-advantage analysis is a theorem about what exchange makes possible, not about markets per se.

    This sourceJohn Murray, London. Chapter 7 ('On Foreign Trade') develops comparative advantage with the England

• Gains from Trade
  • Gains from Trade names the abstraction that (1) when two or more parties each specialize in activities where they hold a comparative advantage — the lowest opportunity cost, not necessarily the lowest absolute cost — and then (2) voluntarily exchange their surplus output on mutually agreeable terms, (3) the combined consumption possibilities of the participants strictly exceed what any of them could reach under autarky (self-sufficiency), so that (4) trade, properly structured, is a positive-sum transformation in which everyone can be made better off without anyone being made worse off.

    This sourceCh. 7 ('On Foreign Trade') develops comparative advantage via the England-Portugal cloth-and-wine example; directly supports the Core-Idea statement of the gains-from-trade abstraction and the Structural-Signature 'set of agents with different endowments' element.

• No Free Lunch Theorem
  • In economics, comparative advantage and the specialization-versus-flexibility tension mean a firm or country excelling in one product class is by that fact less able to excel in others.

    This sourceStates the theory of comparative advantage, the economic instance of the specialization-versus-flexibility conservation in which excelling in one product class entails being less able to excel in others.

• Opportunity Cost
  • .

    This sourceJohn Murray, London. Chapter 7 ("On Foreign Trade") develops the theory of comparative advantage with the canonical England-Portugal cloth-and-wine example: even when one country is absolutely more productive in both goods, both gain by specializing according to relative opportunity costs and trading. Extends Smith's intra-workshop partitioning logic to the international scale, where geographies become the differentiated performers and trade is the re-integration interface.

• Specialization
  • Specialization across firms and regions underlies trade theory, where each party concentrates on what it produces at lowest opportunity cost.

    This sourceJohn Murray, London. Chapter 7 ("On Foreign Trade") develops the theory of comparative advantage with the canonical England-Portugal cloth-and-wine example: even when one country is absolutely more productive in both goods, both gain by specializing according to relative opportunity costs and trading. Extends Smith's intra-workshop partitioning logic to the international scale, where geographies become the differentiated performers and trade is the re-integration interface.

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