Salient Differences Between Ricardo and Smith

The most salient difference between Smith and Ricardo’s works is their conflict on the way society is moving forward. An increase in production is definitely the oil in the machinery that allows an accumulation of wealth in society; however Ricardo professes that it will eventually stop whereas Smith suggests that growth will repeat itself in a cyclical manner. Each person in society will become more productive as the division of labor increases. This will lead to an increase in spending and thus the market will expand, and so any excess commodities will be sold for other ones. Capital accumulation also will increase productivity since excess capital can be used in the next cycle to promote growth. Despite Smith’s rationale, Ricardo concluded that the economy will eventually stop growing because profits are in time filtered out due to wages and rents. According to Ricardo landowners spend their money on veblan-type goods, farmers on necessities and capitalists on reinvesting....