TRHS AP Euro

Wednesday, December 06, 2006

Ricardo: The Iron Law of Wages

How might Ricardo be considered a liberal? What are his main points regarding wages?

Due: MIDNIGHT, Wednesday, Dec. 6

posted by RJS at 7:54 AM

7 Comments:

  • I usually do not think of liberals as bankers who advocate low wages as a result of inexorable economic laws. Ricardo fits pretty well with the laissez faire economic theory, and speaks out against aid for the poor in society. Apparently he feels that this drains funds from the rich and removes proper motivation from the poor. Perhaps he also feels that helping a drowning man out of a river removes all the motivation for that man to learn how to swim.
    Ricardo is a banker- I knew his views would tend toward the upper end of the economic spectrum. I also note a theme in his work that I found myself doing when I studied macroeconomics. Looking at big picture equations tends to blur the focus on very real human beings who are affected by economic policy. Saying standard of living and gross domestic product decrease is quite different from describing an eviction of a single mom with three kids, a 7.00 an hour job and few friends. Ricardo speaks of families only as causes of fluctuations in wages.
    His general points- wages increase when workers decrease, workers then increase, wages then decrease, workers then decrease- are indeed correct. But instead of speaking about natural labor prices tending actual prices downward, perhaps Ricardo could focus on the portion of society left out of the economic loop. Motivation matters little when no one is willing to hire. Ricardo complains that poor laws drain the rich. At least the rich have something to be drained from. Economic theory is just that- theory. Reality bites hard sometimes.

    By Blogger ThomasBatson, at Wednesday, December 06, 2006 10:09:00 PM  

  • I'm not quite sure why he's a liberal, at the end he is somewhat clearly against at least economic equality with poor laws and minimum wage. He is certainly for laissez-faire, wanting to government to completely stay out of economic control, believing instead that the nature of economy will provide well enough for the poor in the system most of the time. So long as they didn't have too many kids to immediately become poor again. Ricardo's views aren't exactly skewed in either direction, they just tend to look at the situation realistically and holistically, as is necessary in economics, as no matter how depressing poverty is, the poor will always be with us. It has already been said what his general theory was, that wages tend towards the natural level, fluctuating back and forth according to wage demands followed by population problems and cycling again.

    By Blogger Unknown, at Wednesday, December 06, 2006 10:37:00 PM  

  • David Ricardo could be considered a liberal first of all because he was challenging the norm. The wages were instated as they had been and he's saying 'hey can't you seen whats happening? why dont we regulate it so the population doesn't spaz out.' Also, he says that the wages should be fair an equal. They should make 'the poor rich, not the rich poor'. When he says "wages should be left to the fair and free competition of the market, and should never be controlled by the interference of the legislature" this is a liberal statement because he wants the separation of economy and government. He definately agrees with Laissez Faire since he doesn't want government intervention in the economy.
    Ricardo speaks of wages as a way to stabalize the fluxuating population. Although the logic in keeping wages too low to raise a family is scarce, it makes sense that he would want to watch the population. With Malthus' talk of food supplies failing under the growing population it is understandable that Ricardo should be concerned with population. However, under providing for the work force is not the way to do so. He sees wages as a marker of the population. High wages leads to high population to more workers to less wages to less people to high wages. Wages should not be a way to control population. I can't imagine a work force hearing "ok, well we're kind of short on food so we won't be paying you this week in hopes some of your kids will die and you wont have any more" and reacting happily.

    By Blogger manxomefoe, at Wednesday, December 06, 2006 10:58:00 PM  

  • The liberal ideals of the time are apparent in Ricardo's thesis on the relationship of wages to labor. He, first of all, looks at labor as a commodity to be bought and sold on the free market, with a "natural price" that exists only to keep the laborer alive and healthy enough to continue working. This directly conflicts with Marx's opposition to the bare life that such a system provides, and Marx is also a somewhat holistic thinker (with reference to Nate's writing). Yes, Ricardo seems conservative by today's standards, but as an ecomomist and member of the middle class, not much more should be expected of him. Lassez-faire, you know? The proles are like cattle to them.

    By Blogger Victoria, at Wednesday, December 06, 2006 11:04:00 PM  

  • His comments on Wages being determined by the market and the Goverment having no interference is, as Thomas and Nate say, agrees with Laissez-faire. If he were liberal at all, he was in his last statements duscussing that the goverment be more of it's own seperated branch and explaining that poor laws only bring everyone down, in turn not appealing to the lower class. Ricardo says that a rise in wages would bring a rise in prices, and therefore have no effect on profit, but a rise in wages affecting profit would have no effect on prices. He says that the ability for a laborer to support their family depends on the food and income that the wages will buy and not on the wages themselves. The value of wages would then depend on the prices of goods required to support a family, and the price of goods affects the wages of workers. He also mentions a sort of supply and demand idea where when labor is scarce, it is pricy, and when it is abundant, it is cheap.

    By Blogger TeganLove, at Wednesday, December 06, 2006 11:08:00 PM  

  • Ricardo was a liberal because he wanted to help the "little people". His idea was that it was natural to have low wages, but these wages only allowed workers the bare minimum. Ricardo does not agree with the government trying to make the rich poor instead of trying to make the poor rich. His statement that the government should not interfere with prices and that they should be left to fluctuate on their own is quite liberal because it shows his resistance to the government controlling everything.
    In this document, he showed the labor force the connections in the economy-that the population of a city depends on food supply, not just the wages workers earned. Basically, Ricardo thought it was just a big economic cycle-it repeated itself over and over. As population increased, the food supply will rise in price. Then factories would need more laborers which would decrease wages. And then, continuing the process, laborers would not be able to support their families and the population would decrease. Then wages should rise because of the lack of workers, and the cycle would begin again. Ricardo's points are very obvious-he wants the people to recognize the system and know the effects, all for the benefit of the economy.

    *So it says in the book that Ricardo's main focus was wages and how they affect the workers but in the document he says it's the quantity of food that contributes to the laborer's ability to support himself and his family. Which one is it?

    By Blogger taylor, at Wednesday, December 06, 2006 11:41:00 PM  

  • Perhaps Ricardo could be considered a liberal because he went against the economic grain in that he did not advocate higher wages or better conditions for the working class, which in large part appeared to be the primary focus of many persons at the time. Also perhaps due to his apparent advocation of the laissez faire style economy, in an era where governments were deciding just how much involvement they should have. Ricardo's primary points regarding wages is basically an inumerable amount of means will inevitably come to the same end. If you're comfortable, your children will bear crushing proverty and most likely starve or something else suitably economically disasterous. If you're attempting to scrape together enough to get little Timmy his life-saving operation and feed the 18 kids at home, there's a good chance perhaps in the next 10 years or so you'll experience a brief repreive, only to return to the abyss of poverty from whence you came. His statements suggest that he thought the working class should just stop whining about being the working class since they're going to be poor anyway. As for his views on the poor, he seems to say if the poor really dislike being poor so much, they really should have thought about that before they became the poor instead of consuming revenue via poor aid. For there shall be no realizations of great expectations for poor little Pip.

    By Blogger laura, at Thursday, December 07, 2006 8:56:00 PM  

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