Public Debt Policy and Public Extravagance: the Ricardo—Malthus Debate

Abstract

Much of David Ricardo’s participation in political debate was related, directly or indirectly, to an attempt to curb what appeared to be an expanding economic role for government.¹ Both his economic analysis and his theory of politics led him to conclude that government involvement in the economy should be confined to a narrow range of activities. He pursued two related policy aims in this regard: the reduction of public expenditure and the redemption of the public debt, both of which would lead to a lessening of the tax burden. At times, the views that he expressed regarding these issues appeared intransigent, but he was driven by a sense of public duty to state his views clearly and unequivocally. The purpose of this chapter is to provide a possible explanation for his extreme stance in the theoretical debate over public debt redemption. I shall argue that his position turns on his perception of the wider policy issue of the economic role of government.

Since we have known each other, [Malthus and I] have always freely discussed each other’s opinions, and it is a subject of wonder to our friends that after the innumerable contests we have had together, there should still be such serious difference between us.

David Ricardo in a letter to J.R. McCulloch (8 April 1820), 1951, VIII, p. 178