david ricardo - eatonak.org · david ricardo (1772-1823) principles of political economy and...
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David Ricardo(1772-1823) Principles of Political Economy and Taxation (1819)
Had 16 siblingsBecame Quaker and then independentMalthus’s, J. Mill’s and Bentham’s friendRich (600,000 pounds in 1823; in terms of 2017 US dollar??)Purchased the seat at the British parliamentDied from an infection of the middle ear that spread into the brain
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Rent and theory of profit
Malthus’s idea of Glut
LTV
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Ricardo’sTheoryofRent
I. TwoAssumptions:1.Landdifferedinitsfertilitywithlandbeingarrangedinaspectrumfrommostfertiletoleastfertile.
2.Competitionalwaysequalizedtherateofprofitamongcapitalistfarmerswhorentedlandfromthelandlords.
NetProduce=TotalQ– NecessaryCostsofProduction
whereNecessaryCostsofProduction=Wages+ReplacementK
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RicardoandPriceDetermination
Prices=Wages+Profits
WhataboutRent?Rentwas“inallcasesaportionoftheprofitspreviouslyobtainedontheland.It…[was]neveranewcreationofrevenue,butalwaysapartofrevenuealreadycreated.”
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RicardoandtheRelationshipbetweenProfits,RentandProsperity.
I.“theinterestofthelandlordisalwaysopposedtotheinterestofeveryotherclassinthecommunity”
EconomicwellbeingistiedtoCapitalAccumulation:
1.CapitalAccumulation→2.RisingLaborDemand→3.RisingMarketWages→4.RisingPopulation→5.IncreasedFoodDemands→6.LessFertileLandUse→7.RisingFoodProductionCost→8.RisingRents→9.FallingProfits→10.DecliningCapitalAccumulation
RisingRentsareanEconomicandSocialConstraint.
Decliningprofitabilityasanexplanationofcrisis
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