ABSTRACT
The main purpose of David Ricardo’s Principles of Political Economy, and Taxation (1817; henceforce Principles) was to elucidate the laws which regulated the natural rates of rent, profit, and wages. In particular, a new theory of rent – a theory of differential rent – provided the foundation of a consistent explanation of value, distribution, and growth. It also produced different conclusions to Smith’s about the effects of taxation. In the ‘Preface’, Ricardo wrote:
In 1815, Mr. Malthus, in his ‘Inquiry into the Nature and Progress of Rent’, and a Fellow of University College, Oxford, in his ‘Essay on the Application of Capital to Land’, presented to the world, nearly at the same moment, the true doctrine of rent; without a knowledge of which, it is impossible to understand the effect of the progress of wealth on profits and wages, or to trace satisfactorily the influence of taxation on different classes of the community; particularly when the commodities taxed are the productions immediately derived from the surface of the earth. Adam Smith, and other able writers to whom I have alluded, not having viewed correctly the principles of rent, have, it appears to me, overlooked many important truths, which can only be discovered after the subject of rent is thoroughly understood.
