Why did the 19th century economist David Ricardo change his mind about money and machinery?1 Economists still speculate about the reasons. David Ricardo is one of the most influential classical economists along with Thomas Malthus, Adam Smith, and James Mill. He was a self-made millionaire who made his fortunes on financial speculations about the outcome of the battle of Waterloo. He lived in times when inventions like the steam engine and the textile mills were transforming capitalism and developed a strong interest in the effect of machines on labor. He formulated the machine/labor substitution effect, that is, the ratio at which machines can replace human labor in the production process, which is at the ...
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