ABSTRACT
This chapter considers the question of whether Adam Smith's and David Ricardo's conflicting views had an empirical foundation or were the result of some other factor. While Smith detected a tendency to historically increasing returns associated with the intrusion of low cost mines, Ricardo asserted the ubiquity of diminishing returns as increasingly inferior mineral resources were brought into production. In Smith's time there were many significant economic changes - such as the development of iron making techniques using coke, increasing use of steam power in industry, improvements in transport and the movement to the cities. 'With Ricardo economics took a major step toward abstract models, rigid and artificial definitions, syllogistic reasoning - and the direct application of the results to policy. Ricardo was able to justify his application of the theory of agricultural rent to mining by relating the chain of events which are to be expected as a result of an increase in demand in the coal mining industry.
