GERRIT GORTER
The present study of economics did not, of course, come out of thin air. Although thinkers in classical Greece already reflected on what we now call economics, it was largely in the eighteenth century that systematic thought on the subject began.
Two conceptual tools—the economic cycle and the idea of the invisible hand—date from that century and are still in use today, both in academic research and in education.
This site contains twenty-five portraits of important economists. Each offers a biographical sketch together with an indication of his (and, in one case, her) significance for the development of economic thought. They claim no more than to provide a first introduction to the lives and works of these pioneers.
These articles originally appeared in Dutch in the Tijdschrift voor het Economisch Onderwijs and were later published on the website of Gerrit Gorter. The English translations are by Folkert Gorter.
Index
François Quesnay
Adam Smith
Thomas Robert Malthus
Jean-Baptiste Say
David Ricardo
Antoine Augustin Cournot
John Stuart Mill
Karl Marx
Walras
Carl Menger
Alfred Marshall
Vilfredo Pareto Eugen von Böhm-Bawerk
Knut Wicksell
Max Weber
Irving Fisher
Sam de Wolff
John Maynard Keynes
Joseph Alois Schumpeter
Joan Robinson
Jan Tinbergen
John Hicks
John Kenneth Galbraith
Milton Friedman
Paul Samuelson
David Ricardo
England 1772–1823
David Ricardo (1772–1823) came from a Portuguese-Jewish family that, via Holland, eventually settled in England. His non-English-sounding name reflects that background. Ricardo’s father was a wealthy merchant-banker. Ricardo never received a thorough theoretical education: at just fourteen, he joined his father’s business. He quickly grasped how the stock exchange worked, and by the age of 26, he was financially independent. By the time he was 42, he had made so much money that he was able to retire from business as a very wealthy man. Meanwhile, he had married a Quaker girl — a decision that was not well received by his Jewish family.
Portrait by William Holl
In 1799, during a rather dull holiday, he got his hands on a copy of Adam Smith’s The Wealth of Nations, and his interest was sparked. As a self-made man in every respect, he derived his ideas directly from practical experience. It was James Mill, father of the soon-to-be-famous John Stuart Mill, who saw potential in those ideas and encouraged him to develop his theories further. His first publications often dealt — unsurprisingly — with monetary and banking matters, such as his 1810 work The High Price of Bullion, a Proof of the Depreciation of Bank Notes. Or the article The Price of Gold, published a year earlier, which sparked considerable controversy and drew James Mill’s attention to Ricardo.
In modern textbooks, Ricardo’s work lives on, among other things, in the theory of comparative cost differences, which explains international trade. In doing so, Ricardo positioned himself against Adam Smith’s theory of absolute cost differences, arguing that it is not the absolute but the relative differences in cost that matter. In a now-famous example, he illustrates that although England is more expensive in absolute terms than Portugal, it will nevertheless export clothing to Portugal. Incidentally, while this theory is generally attributed to Ricardo, its earliest traces can already be found in the work of one Robert Torrens in 1808.
But perhaps even more important than this theory was Ricardo’s method. Adam Smith’s ornate language was replaced by Ricardo’s bare and straightforward mode of argument. Whereas Smith frequently wanders into side paths filled with practical examples, Ricardo’s writing goes straight to the point. In other words, Smith’s work had a strong empirical bent, whereas Ricardo was strictly deductive. In that respect, he set the course for all of mainstream economics that followed.
Ricardo became a member of the British House of Commons, where his speeches were renowned. Apparently, they resembled lectures more than political addresses, but they certainly made an impression. Not everyone appreciated the substance of his arguments, by the way. The large landowners were not particularly fond of his views on rent. Ricardo regarded rent as a rather easily earned form of income. With a growing population, rising grain prices would naturally bring in more rent. His proposal to liberalize grain imports—which would cause grain prices, and with them rents, to fall—was poorly received by the English aristocracy. The fact that Ricardo himself owned land and thus collected rent only made his argument more convincing.
Legendary is his friendship with fellow economist Thomas Robert Malthus, whom he met around 1810. They corresponded regularly. They often disagreed, including on the stability of the market system and the so-called Law of Say, but in his final and now-famous letter to Malthus, Ricardo wrote: “And now, my dear Malthus, I have done. Like other disputants, after much discussion, we each retain our own opinions. These discussions, however, never influenced our friendship. I should not like you more than I do if you agreed in opinion with me.”