THE DEMYSTIFICATION OF DAVID RICARDO’S FAMOUS FOUR NUMBERS

The paper offers the first interpretation of David Ricardo’s famous numerical example fully compatible with primary source. It claims that sole purpose four numbers was to illustrate relative value commodities made in different countries is not determined by respective quantities labor devoted their production. This exception results from unequal ordinary profit rates between because capital does move across national borders as easily it within same country. Likewise, also debunks some entrenched myths about example. shows Ricardo did leave terms trade indeterminate, measuring gains trade, and Portugal had no productivity advantage over England. All this contradicts way scholars have interpreted since mid-nineteenth century.