Question

Compare and contrast the views of adam smith and ricardo on economic development

Answer 1

Ricardo’s labour theory is actually just wages based on a money price. It is an objective, numeric value. Smith’s is based on the toil and trouble saved. It is a subjective, immeasurable value. Smith uses food to measure it because food is used to live, and life or well-being cannot be quantified. This impossibility to quantify the unquantifiable leads to the ‘circular reasoning’ complaint by later economists.