8 The Role of the Production of Material Values

Man’s conscious labour and his first tools marked the beginning of the establishment of human society. Human beings embarked upon an entirely new way of life, unlike the life led by animals. Animals can only make use of those benefits which nature provides for them. Labour freed man from this complete dependence upon nature.

With the aid of his new tools man was able to get benefits from nature that were formerly inaccessible to him. He was also able to change these natural benefits and to make them more useful to himself. Tools of stone and wood made it possible for primitive man to considerably extend his use of material values.

Man began to kill large, strong animals and thus added quantities of nourishing meat to his diet. He learned to work the skins of animals and used them to protect his body from the cold. Man also used his tools to build shelters. It was the production of material values that became the basis of life in human society.

As production developed man increased his active influence on nature. He found that he could fulfil his needs more readily through the material values he himself created.

The production of material values is not stationary; it grows, develops and is perfected constantly. In order to exist mankind must constantly produce material values in ever-increasing quantities.

The development of production is an objective necessity, independent of the will and desire of people. It is a law of social existence. (1300)

9 David Ricardo and the Theory of Comparative Advantage

David Ricardo, the greatest of the classical economists, was born in 1772. His father was a member of the London Stock Exchange. Ricardo entered his father’s business at the age of 14. In 1793 he married and started his own business. Young Ricardo quickly made a large fortune.

In 1799 Ricardo read Adam Smith’s “The Wealth of Nations” and developed an interest in political economy (as economics was then called). In 1809 his first writings on economics appeared. These were a series of newspaper articles on “The High Price of Billion”. In 1814 he retired from business to devote all his time to political economy.

Ricardo’s major work was “Principles of Political Economy and Taxation”. This work contains among other things, a pioneering statement of the principle of comparative advantage as applied to international trade.

Ricardo showed why it was beneficial for both countries, for England to export wool to Portugal and import wine in return, even though both products could be produced with less labour in Portugal.

The book covers the whole field of economics as it then existed. Ricardo thought that the economy was growing toward a future “steady state”.

Ricardo’s book was extremely influential. For more than a century after that, much of economics was an expansion of or a commentary on Ricardo’s work. (1100)