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

Rent and theory of profit

Malthus’s idea of Glut

LTV

Ricardo’sTheoryofRent

I. TwoAssumptions:1.Landdifferedinitsfertilitywithlandbeingarrangedinaspectrumfrommostfertiletoleastfertile.

2.Competitionalwaysequalizedtherateofprofitamongcapitalistfarmerswhorentedlandfromthelandlords.

NetProduce=TotalQ– NecessaryCostsofProduction

whereNecessaryCostsofProduction=Wages+ReplacementK

RicardoandPriceDetermination

Prices=Wages+Profits

WhataboutRent?Rentwas“inallcasesaportionoftheprofitspreviouslyobtainedontheland.It…[was]neveranewcreationofrevenue,butalwaysapartofrevenuealreadycreated.”

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