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In what respects can the popular political economy of the Ricardian socialists be considered radical?

Because theories arent built in isolation from their historical context nor detached from the insights of previous thinkers, in order to understand how the ideas of the Ricardian socialists were forged, we have to take into account the period of time in which they wrote and whose legacy they took on from. This will not only aid our understanding of their theories but also whether their ideas can be regarded as radical in their precise historical context.

With this thought in mind, the Ricardian Socialists have been categorised as radical within their historical context and in that sense to the modern reader they would not necessarily qualify as radicals to the same extent than Carl Marx when he expanded those ideas to a new level. In so far as being the precursors to Marxist ideologies, they can at least be attributed to having paved the way to what we nowadays consider the radical ideas of Carl Marx.

At the end of the XVIII century and beginning of the XIX, England was experiencing an industrial revolution. In one generation England changed from a farming nation to a manufacturing one, factories flourished during this time and cities expanded to accommodate the new labour in search for jobs, but by 1815 with the end of the Napoleonic Wars, the economy had taken a turn for the worse (Lowenthal 1911 p12).

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..for the thirty years succeeding the peace of 1815 England was always uncomfortable: trade was bad, employment scarce, and all its industry depressed, fluctuating and out of heart (Walter Bagehot according to Lowenthal 1911 pp12-13)

It was in this economic climate that a group of economists in the 1820s and 1830s (The so called Ricardian Socialists) began their criticism of the capitalist mode of production in which so much faith had been vested by the earlier orthodox political economists, namely Adam Smith and David Ricardo.

The Ricardian Socialists expanded on the ideas developed in earlier key works, mainly those of Adam Smiths The wealth of nations (1776) and most importantly the key concept of the labour theory of value as described by David Ricardo in Principles of Political Economy (1817), hence becoming known as the Ricardian Socialists. They developed Ricardos labour theory of value concluding that capitalism was a system built on exploitation. Such claim was based on the proposition that labour is the only source of wealth (Burkitt 1984 p 19).

However, Ricardo and Smith would also describe labour as the source of all wealth, but they were both clear defenders of capitalism. So how did the Ricardian Socialists reached such a critical view of the capitalist system. Our attention should then be drawn to the meaning of the concept labour. In other words, as we will see through this essay, the meaning Smith gave to labour justified a deduction from the labour of waged workers as capitalists labour and service of their capital was included in his definition of the word (Burkitt 1984 p21).

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However, the Ricardian Socialists idea of labour did not encompass other labour than that of the waged workers but did continue to justify capitalism. In order to fully understand the differences in the meaning of such concepts we need to look at how the labour theory of value was understood by the Ricardians arising from Ricardos own labour theory of value and how he in turn interpreted those theories from his predecessor Adam Smith.

We might nowadays not subscribe to Adam Smiths feeling of sympathy 1 with the capitalist system depending on whether we are part the 99% or the 1% to draw an analogy from the Occupy Wall Street movement, but being confined to his historical context, proto-capitalism was seen as the only available way for the emancipation of the masses of serfs from the yoke of poverty and the threat of physical coercion at the hands of their lords and hence his welcoming attitude towards capitalism.

Such feudal system was based on a mode of production for use rather than for exchange (Cole 1983 p19) as the capitalist mode of production became known for. Therefore, Smith began amongst other things, studying the value of commodities for their exchange in the market by introducing his theory of value. Smith subscribed to the idea that value was synonymous with productivity rather than with the product itself as the mercantilist view had upheld a century earlier.

According to Smith, the value of a commodity was determined by the amount of labour time required for its production or labour input (Cole 1983 p29), what is known as labour input theory of value. That theory could not fully justify profits as they would be understood as a deduction from the labour input.
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I am not trying to suggest that Smiths sympathies did lie with the capitalist class but that he saw in the protection of the capitalists rights to profit a way out of poverty for the otherwise unemployed working classes..

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Smith continued to insist that capitalists and landowners had a rightful share in the labourers natural recompence2 of their produce in terms of profits or rent and so he devised what is known as the labour commanded theory of value by arguing that the price of each commodity can be attributed to some or all of this factors; wages, profit or rent (Smith 1974, p153 according to Cole 183 p 29). That is, that stock, land and labour are independent sources of value and prices reflect the wages that are paid to labourers, the profits that are paid to the providers of the stock and the rent that is paid to the owners of the land.

It seems untenable to support both arguments but the clear justification for the capitalists right to share in the price of the commodity was served in the second theory. However Ricardos ideas developed from the first premise by rejecting the second one. He agreed with Smith in that the value is only determined by labour, that labour is the only source of wealth, and that the quantity of labour embodied in a commodity defines its value.

Ricardos definition of labour included capital and past output as well as present output (Burkitt, 1984 p 21), of which capital was put at the service of production whilst past output and present output were attributed to wage workers. This understanding of labour continued to defend capitalists rights to sharing in the profits of production until the Ricardian Socialists began disputing this definition of labour by arguing that capital was no more than past stored-up labour.

Another aspect of Ricardos work was that he discovered a direct link between wages and profits. He claimed that profits could only be increased at the expense of wages and vice
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the produce of labour constitutes the natural recompence or wages of labour (Wealth of Nations, Vol. 1 P.82 according to King 1977 p11)

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versa, therefore, finding an explanation for the reasons of low wages as workers seemed to receive wages based on a level of subsistence, that is, a level of living at which no individual accumulation of stocks would occur (Cole 1983 p 31).

The Ricardian Socialists seized on the above suggestions to claim that workers were being robbed by the capitalists of their full wages. Profits, wrote Hodskin (1825), are purely and simply a portion of the product of labour which the capitalist, without any right other than that conferred upon him by law, takes for himself.

The Ricardian Socialists comprised a number of radical economists (Amongst others, Ravenstone, Thompson, Gray, Hodgskin and Bray) that opposed the conventional approach of orthodox economists towards private ownership. All of them agreed that capitalism should be abolished and be replaced by collective ownership.

Their commonly held ideas grouped them together under the same school of though. Amongst others, they mainly argued that capitalist exploitation was due to three main factors:

Labour as the only source of wealth. The value of a commodity is the amount of labour invested in their production. Labour is also a commodity.

The novelty in such propositions is based on how they came to develop Ricardos labour theory of value by mainly changing the definition of the concept labour and equating labour to waged labour exclusively. That is, for them only waged labour was embodied in the value of a commodity. 5|Page

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Furthermore they were more concerned about the equal exchange of value between waged workers and capitalists than they were between the equal exchange of goods as their orthodox counterparts had been until now. Hence, by arguing that labour is also a commodity they were claiming that an equal exchange between workers and capitalists would inevitably exclude profit from the value of a product. Then, profit could only be understood as an unfair deduction from the true value of labour and could only be explained as the exploitation of workers by the capitalists.

According to the Ricardian Socialists land and capital which were regarded as factors in the value of a commodity are relegated to just labour because they claim that without labour neither land nor capital could produce.

Another point that the Ricardian Socialists made was that the capitalists took advantage on the fact that workers could not wait for the proceeds of their work and for that reason needed the capital that only the capitalists could provide them with, and hence there lied another source of the problem. They also argued that because capital was no more than accumulated labour, capitalists were profiting from the inherited wealth that previous generations/workers had invested in the production of such capital and hence their criticism was directed towards capitalists who continued the accumulation of wealth that should be regarded as a trust for future generations, over which individuals possess an equal claim (Burkitt 1984 p 25).

Those mentioned above are crucial points in understanding why they were considered radicals. As they began to challenge the commonly held view that capitalists had a rightful

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vested interest in reaping the profits of their labourers they found themselves in direct confrontation with the liberal ideas postulated by the orthodox political economists.

They can also be considered radical in the sense that their beliefs gave way to the scission from the commonly held liberal ideas of the orthodox school to become the precursors to one of the great traditions of political thinking namely socialism, the aim of which became the preference for community values and social ownership or control of the means of production (Cole 1983 p 363). Not just they clearly influenced Carl Marxs ideas but communism was established almost a century later on political systems around the world that were based on some of their very same propositions.

It has been argued though, that the Ricardian Socialists had not provided a satisfactory explanation for their theory of capitalist exploitation. Amongst their most fervent sceptics we find not liberal political economists but the most unlikely of critics, that is Engels and Carl Marx, whom we could qualify as socialists themselves.

As Engels argued, the early socialists were incapable of defining what the exploitation of the working class consisted on nor how it arose because in order to do so, Engels claimed, it is necessary to understand that capitalism was the inevitable product of a particular historical context and also because they failed to discover the theory of surplus value. Engels stated that ...even if the capitalist buys the labour power of his labourer at its full value as a commodity on the market, he yet extracts more value from it than he paid for (King A 1983 p345).

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Marx acknowledged that Smith had recognised the true origin of surplus-value (Marx 1963 p 80 according to King 1983 p349) in that he pointed towards the notion that the surplus labour performed by the producers was the source of the capitalists profit, and hence also the source of rent, interest and other non-wage incomes (ibid). That assertion refutes the Ricardian Socialists theory. According to Marx, labour might be the only source of value, yet those other incomes are not. They are simply a value added by the capitalists or what is the same a surplus value.

Although heavily criticised for lacking the scientific approach of later radicals like Carl Marx the Ricardian Socialist can be credited with having developed a theory of exploitation by the capitalist system which encouraged further research from later radical economists. Also they can be credited with the movement that opposed liberalism namely socialism upon which other writers expanded their own ideas. In that sense we can claim that the group of radical political economists called the Ricardian Socialist shouldnt just be considered radical in their own historical context but could be argued that their ideas (even if just an application of morality to economics as Engels claimed), are more than ever relevant to us, specially in a time when our mode of production has proven that ending the crisis of capitalism can only be achieved by ending capitalism itself.

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Bibliography

Bill, D (2009) Global Political Economy a Marxist Critique. London. Pluto Press.

Burkitt, B (1984) Radical Political Economy. Sussex, Wheatsheaf Books LTD.

Cole, K. Cameron, J. Edwards, C. (1983) Why Economists Disagree: the political economy of economics. London. Longman.

Lowenthal, E (1911) The Ricardian Socialists. (digital version) http://www.archive.org/stream/popularpolitica00hodggoog#page/n10/mode/2up

King, J (1983) Utopian or scientific? A reconsideration of the Ricardian Socialists. History of Political Economy 15:3 Duke University Press

Meek R. (1977) Smith Marx and after ten essays in the development of economic thought. London. Chapman and Hall Ltd.

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