Smith's Legacy and the Definitions of the Natural Wage in Ricardo

There is an on-going controversy on the interpretation of David Ricardo's wage theory, which has undoubtedly been fueled by the existence of contradictions and difficulties in Ricardo's own treatment of wages. The aim of this paper is to clarify the sources of these difficulties, and to trace their possible historical and analytical reasons. To this end, Ricardo's contribution is put in historical context, and compared with the received doctrine of his time, that is, with Adam Smith's wage theory. This comparison shows that there are many Smithian elements in Ricardo, and that the problems emerge when Ricardo departs from Smith. These problems are essentially the coexistence of Smithian and Ricardian notions of the natural wage in Ricardo's work and the difficulties in reconciling the latter with the distinction drawn by Ricardo between natural and market variables. The reason.for Ricardo's partial departure from Smith, it will be argued, may have been his wish to render more clear-cut his conclusions concerning the tendency of the profit rate to fall in consequence of a rising price of corn. The effort to clarify the difficulties in Ricardo's theory and the comparison with Smith also entail an interpretation that differs in important respects from those found on both the main sides of the controversy over his wage theory.