David Ricardo - eatonak.org€¦ · David Ricardo (1772-1823) Principles of Political Economy and...
Transcript of David Ricardo - eatonak.org€¦ · David Ricardo (1772-1823) Principles of Political Economy and...
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