Jeremy Bentham ( 17.18-1832) gave the classi cal economy its ethical framework through his formulation and tireless propagation of the utilitarian philosophy. Utilitarianism in its early form was largely an application to ethics of the individualistic doctrine of self-interest which Smith and the Physioerats had applied so skillfully ill the field of political philosophy. "To obtain the greatest portion of happiness for himself is the object of every rational being," says Bentham.—All that was materialistic. pessi mistic, and mechanical in the classical system of !political economy seems to have hell magni fied and intensified by the famous /r.:ssoy on thc Principle of Population by .1/o/thus (q.v.). who in his fondness for the historical method of re search was in marked contradistinction to the Men about him. But his favorite method had little or no effect upon the classical political economy, while his famous doctrine that population tends to increase faster than food became the very backbone of the classical economy and modified almost every departillellt of 1111111:111 t11011glit. it may, indeed, be said that while Adam Smith in vestigated the causes of the wealth of nations, gave an exposition of the causes of pov erty. and the contrast is not unfair. The one was essentially an optimist, the other, if not him self pessimistic, certainly gave a more pro nounced impetus to pessimistic tendencies than any other economist in the history of the science. From the scientific standpoint, the most impor tant use made of the Alalthusian proposition was in the Ricardian theory of distribution.
David Ricardo (1772-1823) held that as a country grew and population increased society would be forced to resort to poorer and poorer soils to obtain its supply of food, the of diminishing returns would set in, and as the margin of cultivation was forced down an increasing share of the product of industry would go to the landlord in the shape of economic rent —the difference between the natural productivity of the better land and the worst land in cultiva tion. Excluding rent, the division of the re mainder of the product between the laborer and the capitalist was determined by a corollary of the Malthusian principle—the 'iron law of wages.' In the long MD, Ricardo held. wages
would tend to equal the cost or price of the food, necessaries, and conveniences required for the support of the laborer and his family in their accustomed style of living. Profits, naturally, consisted of the product minus rent and wages; they were 'the leavings of wages.' Ricardo's theory of 'progress,' then, is clear. With the passage of time and the settlement of the coun try, rent would absorb a larger share of the prod uce, increasing both absolutely and relatively; wages would absorb a larger share, increasing relatively, lint remaining constant in amount (with a tendency, however, to decrease as rents rose higher and higher) ; while profits would necessarily decrease both absolutely and rela tively. This theory of distribution was de veloped as an integral part of his famous cost of production theory of value, i.e. that com modities will tend to exchange in quantities pro portional to the respective expenses of producing them. In stating this theory Ricardo at times spoke as if all the expenses of production could lie resolved into the toil and sacrifice of labor— commodities, he was fond of saying, tend to ex change for each other according to the respective amounts of labor embodied Or realized in each. He thus supplied the socialists with their cele brated labor theory of value, according to which labor is the sole cause of value, and in conse quence is entitled to the whole produce of in dustry. To a great extent Ricardo molded the economic thought of the day, and has greatly influenced the later economists. The socialists took from it, illogically perhaps, the iron law of wages and the labor theory of value. Henry George took from it. but logically in this case, the doctrine that progress itself means poverty so long as private property in land is permitted. Finally, Ricardo's theory shifted the centre of economic interest from the land-owning classes to the capitalist class.