A Note on the Role of Aggregate Demand in Ricardo

Alex Thomas

History of Economics Review, 2018, vol. 70, issue 1, 60-71

Abstract: In the voluminous secondary literature on Ricardo’s political economy, there is no role for aggregate demand. Through a close reading of Ricardo’s Principles of Political Economy and Notes on Malthus, this paper argues that aggregate demand – defined as investment and consumption in the aggregate – matters in Ricardo notwithstanding his special assumption that saving is investment. After presenting Ricardo’s methodology through the distinct determinants of ‘value and riches’, the motives to accumulate and produce, and the saving-is-investment assumption, the scope of Say’s Law in Ricardo is laid out. Subsequently, through an exposition of his commentary on gluts and ‘extension of the market’, the theoretical possibility of aggregate demand deficiency in Ricardo is outlined.

Date: 2018
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DOI: 10.1080/10370196.2019.1575175

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