ABSTRACT
This chapter reconstructs and analyses the examples that are reported in the famous chapter ‘On Machinery’ added by Ricardo in the third edition of his Principles. In this chapter Ricardo considers three examples. The last of these examples is an historical example. In it employment actually decreases for a while, but later new work opportunities are created, albeit not as a consequence of the same process of innovation. It is rather due to the fact that the economy is growing. In order to abstract from this factor, Ricardo produced his main examples in conditions in which there is no accumulation: the economy is stationary and the profit rate is at its minimum level. Ricardo was aware of two special cases in which technical change cannot affect the rate of profit: (i) the case in which the technical change affects neither which type of land is marginal nor the processes of production operated on marginal land; (ii) the case in which the rate of profit is determined in agriculture and the technical change affects only the technology of manufacturing. Ricardo’s examples are fully understood when these two cases are considered.
