ABSTRACT
This chapter focuses on how the development of economic theory in the West has proceeded by way of reaction from, or extension to, Ricardian system. It explains briefly the Ricardian contribution and the ways in which developments up to the outbreak of the First World War can be conceived as extensions or modifications of that contribution. In the Ricardian model all, or nearly all, the relevant costs of production were resolved into quantities of labour, direct or indirect. From the pricing of productive services it is a natural step to the value of the agents which render them. This involves the theory of interest and the influence thereon of saving and investment. Ricardo operated on the assumption of a labour supply which responded directly to variations of wages and in the long run tended to a figure which, involved a rate of wages affording some sort of conventional subsistence for the worker and a family of appropriate size.
