Ricardo is widely celebrated among the Classical-Economists…..

Ricardo asserts that labour (mainly) decides the quantity and value of anything, the labour theory of value, and, that wages and population are connected because higher wages would increase the population and labour-force, thereby wages would again fall to minimum or subsistence wages due to increase in labour-supply. However during the past century, in the real world population has actually decreased which means that wages might increase as a result of lower labour-supply and that has not happened. Even though, nominal wages have increased because of inflation, but real wages have gone down in most of the developed-World. Moreover, the share of labour or wages in the Goss Domestic Product has also gone down in the real terms, which means that inequality has increased in the past and that might have resulted in lower growth, because the Classicals have also assumed that all wages are consumed which generate demand, since the labours have a higher propensity to consume, and all the profits are invested because their propensity to consume is lower. Therefore, we may call the labour-side, the demand-side of the economy and the capitalist the supply-side. And, it is a stylized-fact that to restore equality or equilibrium (demand and supply, and, price-stability and full-employment), it is important that the share of wages equal the share of profits. Nonetheless, if real wages and share of wages, and demand would go down, it would increase supply relative to demand and lower prices, and the capitalist would invest less and everytime capitalist would invest less demand would go down because unemployment would go up and the economy would fall in a deflationary-spiral and vice-versa, same as put by Harrod-Domar and Solow as the knife-edge problem. Similarly, if savings, investment and profits fall it would reduce supply and increase the prices and everytime capitalist would invest and supply less the gap between demand and supply would increase, demand would go up relative to supply even if it is held constant and it would increase the prices, the economy would generate the inflationary-spiral and vice-versa. Therefore, in order to achieve equality and equilibrium it is crucial that the share of wages and profits remain equal in the GDP and real wages increase till full-employment. Of the above two, increasing real wages and share of wages seem more correct because higher demand and prices would also increase supply upto full-employment. Below the full-employment prices tend to go down and increase real wages because supply and production would increase because of excess labour supply and above full-employment prices increase because of less labour supply.  The Classical-Economists further viewed full-employment resulting in the Stationary-State, a state in which production or supply could not be increased without innovation or better use of resources. Therefore, they have stressed on better division of labour and increasing productivity of labour. In the theory of Comparative Advantage, Ricardo has put weight on specializing in production and export of those things which a country produces at lower cost and use the cheap factor intensively which points that a country that is capital rich should specialize in capital-intensive line of production and a country that is labour rich should produce more labour intensive products……

Ricardo is widely celebrated among the Classical-Economists…..