From bounties on exportation to the natural and market price of labour: Smith versus Ricardo

Meacci, Ferdinando (2011): From bounties on exportation to the natural and market price of labour: Smith versus Ricardo. Forthcoming in: The European Journal of the History of Economic Thought (2014)

Abstract

Schumpeter’s remarks on Ricardo’s criticisms of Smith’s system of thought (1954, p.472) can be further articulated by noting that while Ricardo’s most explicit and fundamental criticisms reach a climax in his chapter On Value, a number of explicit criticisms are concerned with apparently more specific or practical issues. One of these issues can be found in Chapter XXII, Bounties on Exportation, and Prohibitions of Importation of his Principles. This chapter provides a criticism of Chapter V, Of Bounties, Book IV of the Wealth of Nations and is intended to prove that “perhaps in no part of Adam Smith’s justly celebrated work, are his conclusions more liable to objection, than in the chapter on bounties” (1821, p.304). The historical relevance of Ricardo’s criticisms on this issue is confirmed in two opposite directions. One goes back to the years between the fist edition of the Wealth and that of Ricardo’s Principles. The other brings us forward to the years of Sraffa’s publication of Ricardo’s works and to the following revival of interest on Ricardo’s thought, either as such or as an alternative to Smith’s. Thus the issue has eventually fallen into the hands, or between the lines, of a growing number of authors who have dealt with Ricardo’s or Smith’s systems of thought in recent years. Among these recent authors are Peach (1993, 2008, 2009), S. Hollander (1973, 1979, 1980, 1982, 1987 [1992], 1992), O’Brien (1981 [2004]), O’Donnell (1990), West (1982), Gibbard (1994), Samuelson (1977, 1992), Elmslie (2004), Hueckel (2000a, 2000b, 2009) and others. The scope of this paper is narrower than that of the whole literature developed in the two periods above. It will not be confined, however, to the details of Ricardo’s criticisms of Smith’s argument but will reach for the analytical foundations both of these criticisms and of that argument. At this deeper level, the paper will be structured so as to provide, wherever possible, Smith’s virtual self-defence against Ricardo’s criticisms. Thus it will proceed by assessing, fist, whether or to what extent Smith and Ricardo are on this particular issue consistent “with themselves”, i.e. with the foundations (or other parts) of their different works; and, secondly, whether Ricardo’s criticisms are based on a misunderstanding of at least some of the foundations (or other parts) of his predecessor’s work. Smith’s virtual self-defence will be carried out by focusing on some diverging foundations of his system vis-à-vis Ricardo’s and, more particularly, on the temporary vs. permanent, money vs. real and market vs. natural price of labour (work to be done) as distinct from the temporary vs. permanent, money vs. real and market vs. natural price of commodities as products of labour (work done

• Item Type: MPRA Paper
• Language: English
• Keywords: Smith; Ricardo; Bounties; Money and real price; Natural and market wages
• Subjects: B - History of Economic Thought, Methodology, and Heterodox Approaches > B1 - History of Economic Thought through 1925 > B12 - Classical (includes Adam Smith); B - History of Economic Thought, Methodology, and Heterodox Approaches > B3 - History of Economic Thought: Individuals > B31 - Individuals

References

Anderson J. (1777 [1968]), Observations on the Means of Exciting a Spirit of National Industry, New York: A. M. Kelley.

Elmslie B. (2004), “Adam Smith's Analysis of Bounties as an Early Example of the Concept of Noneconomic Objectives”, American Journal of Economics and Sociology, Volume 63, pp. 899–9104

Gibbard K. (1994), “Hollander's Textual Interpretation of Ricardian Growth Theory: A Reconsideration”, History of Political Economy, 26(3): 465-485

Hollander S. (1973), The Economics of Adam Smith, London: Heinemann

------- (1979), The Economics of David Ricardo, Toronto: University of Toronto Press

------- (1980), “On Professor Samuelson’s Canonical Classical Model”, Journal of Economic Literature, XVIII, pp. 559-74

------- (1982), “The Economics of David Ricardo: A Response to Professor O’Brien”, Oxford Economic Papers, XXIV, pp. 224-46

------- (1987 [1992])), Classical Economics, Toronto: University of Toronto Press

------- (1992), “On Malthus’s Physiocratic References”, History of Political Economy, 24:2, pp.369-380

Horner F. (1804 [1957]), “Observations on the Bounty upon Exported Corn”, in F.W.Fetter (ed.), The Economic Writings of Francis Horner in the Edinburgh Review, London: London School of Economics and Political Science, pp.77-95

Hueckel G. (2000a), “On the “Insurmountable Difficulties, Obscurity, and Embarrassment” of Smith’s Fifth Chapter”, History of Political Economy, 32:2, pp.317-345

------- (2000b), “The Labor “Embodied” In Smith's Labor-Commanded Measure: A “Rationally Reconstructed” Legend”, Journal of the History of Economic Thought, 22: 461-485

------- (2009), '''In the Heat of Writing': Polemics and the 'Error of Smith' in the Matter of the Corn Bounty'', in Young J. T., Elgar Companion to Adam Smith, Cheltenham: E: Elgar, pp.229-260

Malthus T.R. (1803 [1986]), An essay on the principle of population, in E.A. Wrigley and D. Souden (eds), The works of Thomas Robert Malthus, London: Pickering, Vol. 2

------- (1814 [1986]), Observations on the Effects of the Corn Laws, in E.A. Wrigley and D. Souden (eds), The Works of Thomas Robert Malthus, London: Pickering, Vol. 7

Meacci F. (2006), “The competition-of-capitals doctrine and the wage-profit relationship”, in N. Salvadori (ed.), Economic Growth and Distribution: On the Nature and Causes of the Wealth of Nations, Edward Elgar, 2006, pp.58-74

------- (2012), “On Smith’s ambiguities on value and wealth”, History of Political Economy, forthcoming, MPRA Paper 28866

Naldi N. (2003), “Labour Employed in Production and Labour Embodied: A Ricardian Conjecture”, Cambridge Journal of Economics, 27, pp.547-62

O’Donnel R. (1990), Adam Smith’s Theory of Value and Distribution: a Reappriasal, New York: St Martin’s Press

O'Brien D. P. (1981 [2004]), The Classical Economists Revisited, Princeton: Princeton University Press

------- (1981), “Ricardian Economics and the Economics of David Ricardo”, Oxford Economic Papers, XXXIII, pp.352-386

Peach T. (1993), Interpreting Ricardo, Cambridge: Cambridge University Press

------- (2008), “A note of dissent on the ‘index number’ interpretation of Adam Smith's ‘real measure’, in Cambridge Journal of Economics, 32 (5): 821-826

------- (2009), “Adam Smith and the Labor Theory of (Real) Value: A Reconsideration”, History of Political Economy, 41(2), pp.383-406

Pownall T. (1776 [1977]),. A Letter from Governor Pownall to Adam Smith, in E.C. Mossner and I.S. Ross (eds), The Correspondence of Adam Smith, Oxford: Clarendon Press, Appendix A

Ricardo D. (1821), On the Principles of Political Economy and Taxation, in Sraffa P. (ed.), Vol. 1

Samuelson P.A. (1992), “The Overdue Recovery of Adam Smith’s Reputation as an Economic Theorist”, in M. Fry (ed.). Adam Smith’s Legacy, His Place in the Development of Modern Economics, London and New York: Routledge, pp.1–14

------- (1977), "A Modern Theorist's Vindication of Adam Smith", The American Economic Review, Vol. 67, Papers and Proceedings, pp. 42-49

Schumpeter J.A. (1954), History of Economic Analysis, London: Routledge

Smith A. (1776 [1976]), An Inquiry into the Nature and Causes of the Wealth of Nations, Oxford: Clarendon Press Sraffa P. (ed.), (1951-1973), The Works and Correspondence of David Ricardo, Cambridge: Cambridge University Press, 11 Vols

------- (1951), “Introduction”, in Sraffa P. (ed.), (1951-1973), Vol. I, pp.xiii-lxii

------- (1960), Production of Commodities by Means of Commodities, Cambridge: Cambridge University Press

West E.G. (1982), “Ricardo in Historical Perspective”, The Canadian Journal of Economics / Revue Canadienne d'Economique, Vol. 15, pp. 308-326