David Ricardo
(1772-1823 )
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avid Ricardo was one of those rare people who achieved both
tremendous success and lasting fame. After his family disinherited him
for marrying outside his Jewish faith, Ricardo made a fortune as a
stockbroker and loan broker. When he died, his estate was worth more
than $100 million in today’s dollars. At age twenty-seven, after reading
ADAM SMITH’s The Wealth of Nations, Ricardo got excited about
economics. He wrote his first economics article at age thirty-seven and
then spent the following fourteen years—his last ones—as a professional
economist.
Ricardo first gained notice among economists over the “bullion controversy.” In 1809
he wrote that England’s INFLATION was the result of the Bank of England’s
propensity to issue excess banknotes. In short, Ricardo was an early believer in the
quantity theory of money, or what is known today as MONETARISM.
In his Essay on the Influence of a Low Price of Corn on the Profits of Stock (1815),
Ricardo articulated what came to be known as the law of diminishing marginal
returns. One of the most famous laws of economics, it holds that as more and more
resources are combined in production with a fixed resource—for example, as more
labor and machinery are used on a fixed amount of land—the additions to output will
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