ABSTRACT

E. Halevy has stated that ‘there is a diametrical opposition in Ricardo between the fundamental principles of economic statics and dynamics’. The conflict between the optimism of D. Ricardo’s static theory and the pessimism of his long-run dynamics throws some light on his ambivalence in his advocacy of laissez-faire. The law of diminishing returns forms the basis of Ricardian dynamics as well as of the Malthusian population theory. Furthermore, Ricardo’s ideas about dynamics tie in closely with those of Malthus. Ricardo’s predictions as to the long-run trend of profits moves along the same lines as his theory of wages. Ricardo develops the idea of the equilibrating function of profits which was taken over by neoclassical theory. Ricardo discusses, the profits of the farmer, then those of the manufacturer. Ricardo paints an austere picture of the majesty of economic laws, which man cannot change and should not interfere with.