Ricardo the ‘Logician’ versus Tooke the ‘Empiricist’: On Their Different Substantive Contributions to Classical Economics

Abstract

David Ricardo and Thomas Tooke were contemporaries in the ‘golden era’ of English classical economics. Whereas Ricardo can be characterised as the supreme deductive thinker among the classical economists of the time, Tooke can be characterised as the supreme inductive and empirical thinker. Ricardo’s substantive contributions were to the core theory of value and distribution. Tooke’s substantive contributions were to the empirical analysis of prices and to monetary theory and policy. The relationship between these two classical economists with their very different approaches to economics is explored and their substantive contributions to the development of classical economics are compared. Tooke’s banking school monetary theory is shown to represent an outright rejection of Ricardo’s well-established monetary theory. It is argued that Tooke’s monetary theory provides a more valuable and lasting contribution than Ricardo’s quantity theory of money to the development of classical economics after Sraffa. In a brief conclusion, the different substantive contributions of these two economists to modern classical economics are reconciled.

Keywords:

• Thomas Tooke
• David Ricardo
• classical economics
• Sraffian economics
• monetary economics
• distribution and prices

Notes

Acknowledgements

I acknowledge the helpful comments of the referees and editors in improving the paper.

Disclosure statement

The author reports no conflicts of interest. The author is alone responsible for the content and writing of this article.

Notes on contributor

Matthew Smith’s main field of research is the history of economic thought, with a focus on classical economics. He has published several articles on classical economics and is author of 'Thomas Tooke and the Monetary Thought of Classical Economics' (2011).

Notes

1 In the preface to the Principles Ricardo wrote:The writer, in combatting received opinions, has found it necessary to advert more particularly to those passages in the writings of Adam Smith from which he has reason to differ; but he hopes it will not, in that account, be suspected that he does not, in common with all those who acknowledge the importance of the science of Political Economy, participate in the admiration which the profound work [i.e. Wealth of Nations] of this celebrated author so justly excites (1951–73, I, 6).

2 Also see Ricardo (1951–73, VI, 315-16).

3 In the Essay on Profits Ricardo wrote:In all that I have said concerning the origin and progress of rent, I have briefly repeated, and endeavoured to elucidate the principles which Mr. Malthus has so ably laid down, on the same subject, in his ‘Inquiry into the Nature and Progress of Rent’ (1951–73, IV, 15 n).

4 The implicit assumption here is that there is no scarcity of no-rent land for productive use.

5 As Sraffa wrote:The advantage of Ricardo’s method of approach is that, at the cost of considerable simplification, it makes possible an understanding of how the rate of profit is determined without the need of a method for reducing to a common standard a heterogeneous collection of commodities (1951, xxxii).

6 Ricardo’s notion of Say’s Law did not imply full labour employment, as supposed in marginalist economics. Instead, for a given technique it implied the maximum number of workers employed productively by the amount of accumulated capital employed, consistent with unemployed labour. In this sense Ricardo’s version of Say’s Law corresponded to the maximum level of output produced by the full-utilisation of productive capacity. But while Ricardo applied Say’s Law to the short run, other classical economists were more careful to invoke it only in the long run in which the level of output was considered consistent with labour unemployment (see Smith 2011: 103–4). As Garegnani (1983: 24–8) has shown, Say’s Law of the classical economists, including Ricardo, stemmed from the absence of any coherent theory of output with a saving-investment analysis.