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David Ricardo on how “insecure tenure” of property rights harms the poor (1824)

In an essay on “Parliamentary Reform” (1824) the English economist David Ricardo argued that the poorest members of society are harmed the most when the sanctity of property is threatened, thus making capitalists reluctant to invest in productive economic activities which pay good wages:

Whatever might be his gains after such a principle (of redistribution) had been admitted would be held by a very insecure tenure, and the chance of his making any future gains would be greatly diminished; for the quantity of employment in the country must depend, not only on the quantity of capital, but upon its advantageous distribution, and, above all, on the conviction of each capitalist that he will be allowed to enjoy unmolested the fruits of his capital, his skill, and his enterprise. To take from him this conviction is at once to annihilate half the productive industry of the country, and would be more fatal to the poor labourer than to the rich capitalist himself. This is so self-evident, that men very little advanced beyond the very lowest stations in the country cannot be ignorant of it …

The last point for consideration is the supposed disposition of the people to interfere with the rights of property. So essential does it appear to me, to the cause of good government, that the rights of property should be held sacred, that I would agree to deprive those of the elective franchise against whom it could justly be alleged that they considered it their interest to invade them. But in fact it can be only amongst the most needy in the community that such an opinion can be entertained. The man of a small income must be aware how little his share would be if all the large fortunes in the kingdom were equally divided among the people. He must know that the little he would obtain by such a division could be no adequate compensation for the overturning of a principle which renders the produce of his industry secure. Whatever might be his gains after such a principle had been admitted would be held by a very insecure tenure, and the chance of his making any future gains would be greatly diminished; for the quantity of employment in the country must depend, not only on the quantity of capital, but upon its advantageous distribution, and, above all, on the conviction of each capitalist that he will be allowed to enjoy unmolested the fruits of his capital, his skill, and his enterprise. To take from him this conviction is at once to annihilate half the productive industry of the country, and would be more fatal to the poor labourer than to the rich capitalist himself. This is so self-evident, that men very little advanced beyond the very lowest stations in the country cannot be ignorant of it, and it may be doubted whether any large number even of the lowest would, if they could, promote a division of property. It is the bugbear by which the corrupt always endeavour to rally those who have property to lose around them, and it is from this fear, or pretended fear, that so much jealousy is expressed of entrusting the least share of power to the people. But the objection, when urged against reform, is not an honest one, for, if it be allowed that those who have a sacred regard to the rights of property should have a voice in the choice of representatives, the principle is granted for which reformers contend. They profess to want only good government, and, as a means to such an end, they insist that the power of choosing members of Parliament should be given to those who cannot have an interest contrary to good government. If the objection made against reform were an honest one, the objectors would say how low in the scale of society they thought the rights of property were held sacred, and there they would make their stand. That class, and all above it, they would say, may fairly and advantageously be entrusted with the power which is wished to be given them, but the presumption of mistaken views of interest in all below that class would render it hazardous to entrust a similar power with them—it could not at least be safely done until we had more reason to be satisfied that, in their opinion, the interest of the community and that of themselves were identified on this important subject.

About this Quotation:

Ricardo makes three important points in this essay on “Parliamentary Reform” (1824) the first stage of which was in fact achieved shortly after this was written in the Reform Act of 1832. The first point concerns what we now call “regime uncertainty” coined by the economist Robert Higgs, namely that the threat of confiscation or redistribution of property in fact harms the poor because it deters capitalists from making the investments which make production and the payment of wages possible. The second point is that Ricardo is confident that the supposed beneficiaries of any such redistribution must realise that any gain they might make from any redistribution would be quite small given the large numbers of the poor and the relatively few numbers of the rich. The third point is that he believes that the right to vote should be given to any man (but note not woman), no matter how far down the rank of property owners he might be, so long as he believes in “the sacred right to property.” Only a respect for property, in his view, entitles a person to participate in choosing a “good government.” The group of Philosophic Radicals of which he was a part were convinced that as the general level of education in British society increased the numbers of those suitable for the franchise would inevitably expand over time.

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