Contrast and Similarity Between Ricardo’s And Marshal’s Economic Ideas

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Contrast and Similarity Between Ricardo’s And Marshal’s Economic Ideas
Growing the economy of a nation is one of the essential aspects that its government should focus on. Countries have created various policies to help them build strong economies. Besides, some of the policies set by early scholars play essential roles in the building of the modern world's economy. Among such scholars are David Ricardo and Alfred Marshal, who have similar and contrasting economic ideas.
Both Ricardo and Marshal put across an explanation of the law of diminishing returns. According to Marshall, the law of increasing demands means that the larger the unit to be produced, the cheaper it becomes to produce the next unit. He referred to this as the economies of scale. However, this increase in returns only occurs up to a certain point where the gains begin to diminish. The result is the diminishing law of returns. An increase in capital and labor help in the improvement of an organization. In turn, this enhances its efficacy to produce more. As well, Ricardo helped in the development of the law of the diminishing returns. According to the law, organizations have both fixed and variable factors of production. An increase in one of the variables would result in a reduction in production. Hence, this results in marshal's argument on diminishing production.
David Ricardo argues that trade is not only made for the accumulation of wealth. Instead, a combination of industry specialization and free international trade is bound to produce positive results. Industry specialization enables organizations to focus on particular sectors of the ec...