The Ricardo puzzle

Francisco L. Lopes
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Francisco L. Lopes: Macrométrica

No 526, Textos para discussão from Department of Economics PUC-Rio (Brazil)

Abstract: This paper tackles the puzzle of Ricardo’s stubborn commitment to a labor theory of value that he himself saw as no more than an approximation to reality and which was heavily opposed by Malthus, his most respected contemporary. We show it is wrong to think that the theory had no analytical use. Quite to the contrary, it was the only defence Ricardo could find against Malthus’ destructive criticism, which introduced an unacceptable degree of indetermination in his theory of profits. By adopting the labor theory of value, Ricardo drastically simplified the method of proof of his main proposition, which otherwise seemed to present unsurmountable analytical difficulties. The irony is that the proposition was correct, quite independently of the labor theory of value, but Ricardo was just unable to prove it.

Pages: 17p.
Date: 2006-06
New Economics Papers: this item is included in nep-hpe
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