“The dismal world of Malthus and Ricardo” that Basil pointed out is primarily attributed to their discovery of the law of diminishing returns. While the first hour spent studying for a test often proves to be beneficial, the fifteen following pale in comparison. To Malthus and Ricardo the implications of this fact were depressing. What would happen to industrialization and those industrial capitalists? In their minds progress would decrease and eventually halt. The economy would cease to grow, or even worse, deteriorate. There was a substantial debate about what should be done to slow the process. Malthus argued to impose high tariffs while Ricardo advocated free trade, supporting his theory of comparative advantage.
Wednesday, February 9, 2011
Chapter 5 - Pages 53-54
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Just a note on all this, if you're interested in a decent book about the "history" of economics with a pretty good section on Ricardo/Malthus, you could take a look at "The Worldly Philosophers" by Robert L. Heilbroner.
ReplyDeleteB for Basil. You mean "progress" not "progression".
ReplyDeleteI don't know that economists will or should continue to call diminishing returns a "law". We thought it was a law when it was pervasive - Warsh makes this point about the 19th century when the primary industries, agriculture and mining, were characterized by it. But in the 21st century, it's hard to see how is applies everywhere, rather than just most places.
I'll second Basil's recommendation of Heilbroner. I liked his writing; although I know too much of my own brand of economics to be open-minded about his.
ReplyDeleteDr. Tufte, Basil didn't write this post....I'm not sure if you caught that on your grade sheet or not. Also, aren't professors supposed to fake open-mindedness even if they're not? Just kidding.
ReplyDeleteB for Mitch. Sorry to misattribute this post to Basil.
ReplyDeleteI think our willingness to fake open-mindedness has to do with the intellectual distance involved. I think Heilbroner does a world-class job of faking open-mindedness. Given the intellectual distance between us, I'm just calling him out on the faking part.