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Interpreting Ricardo
David Ricardo was the leading political economist of the early nineteenth century, and his ideas have been controversial and influential ever since. This book sets out to reconstruct the detailed substance and evolution of Ricardo's thought on the central topics of value, distribution and accumulation, and to summarize and evaluate the debates that continue to rage over the interpretation of his writings. It differs from other books on the subject by presenting Ricardo's work in its own terms, not those imported from a later theoretical discourse.
- GenresEconomics
336 pages, Paperback
First published March 26, 1993
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Displaying 1 - 2 of 2 reviews
January 20, 2026
Extremely thorough and detailed exposition of the Ricardian system and the debates surrounding it.
Ricardo's system basically revolves upon a certain transmission mechanism where the economy adjusts itself to a secularly declining agricultural rate of profit.
Ricardo's argument is that since the expansion of agriculture (necessitated by the growth in population) is always an expansion into worse land (the marginal productivity of the land decreases), more labour has to be expended for the same yield thereby increasing the labour value of corn. An increasing value of corn means that the wage basket of the entire economy increases, and thus wages increase eating into profits.
The existence of rent, which is the deduction the landlord takes from the farmer which equalises yields between lands of varying productivity, further reduces the profit rate of agriculture.
This rate of profit for agriculture is constant because capital can not actually leave agriculture. All other profit rates adjust and grind down to agriculture since it acts as a lower bound (the presumption that all profit rates equalise is simple supply and demand, industries with high profit rates get flooded by new capital, reducing it, and industries with low profit rates sees capital exit, increasing it. This does not occur with agriculture since the land is tilled by necessity and exits can not occur). So unless the price of corn can be reduced (by improvements in husbandry or trade), basically all nations are doomed as profits become nothing and the incentive for production vanishes.
Obviously Ricardo's pessimism and corn (aka wheat) obsession does not really mean anything to us nowadays (although interestingly enough, American hegemony is in a large way based on its export of Maize [actual corn]).
But there's a very important underlying message which Ricardo is telling us. If there is an important industry which sufficiently undergirds the wage basket of labour, and it faces decreasing marginal productivity, then there will be a reduction in the general profit rate for all industries (as the price of labour increases).
The policy implications is pretty clear, governments should attempt the even development of industry to maintain profit rates.
Ricardo's system basically revolves upon a certain transmission mechanism where the economy adjusts itself to a secularly declining agricultural rate of profit.
Ricardo's argument is that since the expansion of agriculture (necessitated by the growth in population) is always an expansion into worse land (the marginal productivity of the land decreases), more labour has to be expended for the same yield thereby increasing the labour value of corn. An increasing value of corn means that the wage basket of the entire economy increases, and thus wages increase eating into profits.
The existence of rent, which is the deduction the landlord takes from the farmer which equalises yields between lands of varying productivity, further reduces the profit rate of agriculture.
This rate of profit for agriculture is constant because capital can not actually leave agriculture. All other profit rates adjust and grind down to agriculture since it acts as a lower bound (the presumption that all profit rates equalise is simple supply and demand, industries with high profit rates get flooded by new capital, reducing it, and industries with low profit rates sees capital exit, increasing it. This does not occur with agriculture since the land is tilled by necessity and exits can not occur). So unless the price of corn can be reduced (by improvements in husbandry or trade), basically all nations are doomed as profits become nothing and the incentive for production vanishes.
Obviously Ricardo's pessimism and corn (aka wheat) obsession does not really mean anything to us nowadays (although interestingly enough, American hegemony is in a large way based on its export of Maize [actual corn]).
But there's a very important underlying message which Ricardo is telling us. If there is an important industry which sufficiently undergirds the wage basket of labour, and it faces decreasing marginal productivity, then there will be a reduction in the general profit rate for all industries (as the price of labour increases).
The policy implications is pretty clear, governments should attempt the even development of industry to maintain profit rates.
March 10, 2016
Basically, David Ricardo used many different tools, and every economist after him projects out the part of Ricardo they like...and ignore everything else. Consequently, the commentaries on Ricardo are not explications, but eisegeses.
Terry Peach does quite well defending this thesis, sifting through Ricardo's ten-volume collected works. Dr Peach assumes the reader's familiar with the commentaries on Ricardo, and does an adequate job summarizing them before commenting on them.
Terry Peach does quite well defending this thesis, sifting through Ricardo's ten-volume collected works. Dr Peach assumes the reader's familiar with the commentaries on Ricardo, and does an adequate job summarizing them before commenting on them.
Displaying 1 - 2 of 2 reviews