"The exchangeable value of all commodities, rises as the difficulties of their production increase"
About this Quote
Ricardo ties what things exchange for to the conditions under which they can be produced. When a commodity takes more labor, time, or capital to bring to market, its cost of production rises, and so does the rate at which it trades for other goods. Utility is necessary but not sufficient; the guiding force is the difficulty of reproduction. If weaving cloth or growing corn demands more hours of work or must be done on poorer land, the exchangeable value of cloth or corn will tend to be higher. Short-term prices may wiggle with supply and demand, but over time values gravitate toward these cost-determined levels.
The setting is early 19th-century Britain, amid industrial change and debates over the Corn Laws. Ricardo argued in Principles of Political Economy and Taxation (1817) that, for reproducible goods, relative values depend chiefly on the quantity of labor embodied in production, adjusted for the time over which capital is advanced. As population grows and cultivation expands to less fertile land, agriculture faces diminishing returns; the difficulties of production increase, lifting the natural price of corn. This dynamic also generates differential rent: superior land yields surplus returns because its output costs less relative to the new margin of cultivation. Rising food prices then squeeze industrial profits, shaping Ricardo’s case for free trade in grain, which would lower the difficulty of obtaining subsistence, reduce the natural price, and restore profits.
The claim admits exceptions. Unique paintings or rare wines command monopoly prices because they cannot be reproduced by additional labor. And later marginalist economists emphasized subjective value and marginal utility. Still, Ricardo’s core insight survives: technological progress that eases production reduces value, while scarcity of inputs, deeper mines, or stricter constraints raise it. The ebb and flow of exchange values reflect how hard it is to keep the stream of commodities flowing.
The setting is early 19th-century Britain, amid industrial change and debates over the Corn Laws. Ricardo argued in Principles of Political Economy and Taxation (1817) that, for reproducible goods, relative values depend chiefly on the quantity of labor embodied in production, adjusted for the time over which capital is advanced. As population grows and cultivation expands to less fertile land, agriculture faces diminishing returns; the difficulties of production increase, lifting the natural price of corn. This dynamic also generates differential rent: superior land yields surplus returns because its output costs less relative to the new margin of cultivation. Rising food prices then squeeze industrial profits, shaping Ricardo’s case for free trade in grain, which would lower the difficulty of obtaining subsistence, reduce the natural price, and restore profits.
The claim admits exceptions. Unique paintings or rare wines command monopoly prices because they cannot be reproduced by additional labor. And later marginalist economists emphasized subjective value and marginal utility. Still, Ricardo’s core insight survives: technological progress that eases production reduces value, while scarcity of inputs, deeper mines, or stricter constraints raise it. The ebb and flow of exchange values reflect how hard it is to keep the stream of commodities flowing.
Quote Details
| Topic | Money |
|---|---|
| Source | David Ricardo, On the Principles of Political Economy and Taxation (1817), Chapter I (On Value) — contains the statement that exchangeable value rises with the difficulties of production. |
More Quotes by David
Add to List
