The document summarizes David Ricardo's views on the relationship between capital accumulation, population, and wages as discussed in chapter five of his work On the Principles of Political Economy and Taxation. Specifically, it discusses how Ricardo defined a subsistence wage and believed this wage was tied to population levels. Ricardo also felt that capital directly impacts population levels, with capital used to employ more workers having a higher value than capital used for technological innovation. Overall, the document analyzes Ricardo's ideas that accumulation and use of capital determines population levels by influencing wages and employment opportunities for laborers.

1. Charles Curry 1
On the Accumulation of Capital and Population
This paper will focus on chapter five in David Ricardo’s, On the Principles of Political
Economy and Taxation. In chapter five titled, On Wages, Ricardo discusses the various factors
contributing to laborers wages. In elaborating on this topic Ricardo employs several definitions
to explain the interaction of forces creating a laborers wage. These definitions are useful in the
analysis of this paper and as such will be discussed. More importantly, Ricardo contends that
capital has a direct effect on population. The effect which capital has on population, however,
varies depending on the way in which capital is employed. In fact, Ricardo proposes that capital
utilized for the purpose of technological innovation and productive advances is detrimental to the
population. It is relevant to note that this thesis hinges on a strict interpretation of Ricardo’s
vague definitions. Still, though vague, definitions are certainly ascertainable and will be analyzed
accordingly.
Ricardo begins, On Wages, by defining the most fundamental wage required by humans.
He formulates the notion of a subsistence wage which is tied to price. Ricardo states that, “the
natural price of labor is that price which is necessary to laborers, one with another, to subsist and
perpetuate their race, without either increase or diminution” (Ricardo 93). Implicit in Ricardo’s
statement is that some minimal basic amount of foodstuffs be consumed by labor which then
perpetuates their race. He also contends that by definition this amount be sufficient to perpetuate
a constant population level. It is the accumulation and employment of capital which Ricardo
ultimately contends is one factor that changes the natural wage and thus population levels.
Ricardo explains the interaction of capital and wages at length. Therefore, it is necessary
to establish his views on capital before connecting them to the wage rate. Ricardo states that
capital is “that part of the wealth of a country which is employed in production, and consists of

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food, clothing, tools, raw materials, machinery, &c. necessary to give effect to labor” (Ricardo
95). Ricardo’s definition implies that capital is a form of wealth which purchases productive
capacities. He also says that capital gives effect to or thus employs labor. Therefore, he suggests
that labor is unproductive and unemployed without capital. If labor is unemployed it will have no
wages. It would then follow that the laborer would not be able to subsist, even to the extent of
significantly effecting population levels. Though extreme, this example demonstrates the extent
to which capital affects laboring population levels.
Ricardo further suggests the interaction of labor population levels and capital by
formulating a quantity theory of capital. In this theory, population levels are directly related to
the quantity of capital employed and the nature of that employment. Ricardo relays that “Capital
may increase in quantity at the same time that its value rises” (Ricardo 95.) Drawing from
Ricardo’s previous definition of capital, “that part of the wealth of a country which is employed
in production,” an increase in the quantity of capital suggests an increase in the ability of a
country to produce. An increase in production is only possible through an increase in laborers or
a technological innovation which increases output from machinery. Regardless, an increase in
output by machinery or an increase in output by employed persons will increase population.
Increases in output by machinery lower costs and increase the availability of goods thus
perpetuating population by allowing more individuals the ability to consume. Increases in output
resulting from employed persons necessarily coincide with increases in the number of wage
earners. The increase in wage earners then contributes to population growth as these earners have
the capacity to sustain families.
Ricardo then judges the nature of capital employment on the population. He contends that
capital utilized in employing the greatest numbers of people has the highest value. Interestingly,

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in doing so he implicitly discredits the value of increased productivity through innovation.
Ricardo states, “An addition may be made to the food and clothing of a country, at the same time
that more labour may be required to produce the additional quantity than before; in that case not
only the quantity, but the value of capital will rise” (Ricardo 95). Ricardo suggests that increases
in the capital stock require additional labor to produce that stock. Which additionally indicates
that population increased as a result of capital employment. He then relays that this reflects an
increase in the quantity of capital employed and states that this employment increases the value
of capital. Ricardo implies that capital which employs the most persons is of the highest value.
To more fully understand the implications of his idea, conceptualize the inverse of his statement.
The inverse holds that an increase in the capital stock without an increase in employment is only
possible through an increase in the quantity of capital employed in innovative machinery. The
inverse of Ricardo’s analysis suggests that only the quantity of capital has increased, not its
value. Regardless of the method for increasing output, the effect which capital employment has
on the population of labor is undeniable.
Therefore, Ricardo’s notions of efficient allocation of resources are contrary to
contemporary notions of efficiency today. The broader implications of Ricardo’s position
suggest that he favored increased output by wage earners rather than providing the populace with
increased output through machinery. In any case, the affect which capital employment has on the
population of the laboring class is significant. This relationship stems from the fact that labor is
dependent on capital for wages. Without wages the laboring class would be unable to sustain
itself to the degree necessary for employment.

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