On the Principles of Political Economy and Taxation

David Ricardo set out to answer a question Adam Smith raised but never settled: how is the wealth a country produces divided among landlords, workers, and the owners of capital? His answer, published in 1817, turned economics into a system of deduction. Ricardo works out the labour theory of value, the law of diminishing returns on land, and the theory of rent that still carries his name. He also makes the case for comparative advantage, the argument that two countries both gain from trade even when one is better at producing everything, which remains the backbone of the free trade position. Austere, tightly reasoned, and formative for Mill, Marx, and the whole classical school. Available here as a free PDF and EPUB.