ABSTRACT
In the ‘Preface’ to the Principles of Political Economy and Taxation, Ricardo argues that ‘the produce of the earth’ is divided among the landlords, the owners of the stock, and the labourers. However, the proportion in which the whole produce is divided among the three classes in the name of rent, profits and wages depends ‘on the actual fertility of the soil, on the accumulation of capital and population, and on the skill, ingenuity, and instruments employed in agriculture’. From here he goes on to claim that ‘[to] determine the laws which regulate this distribution, is the principal problem in Political Economy.…’ It should, however, be noted that though the idea of a proportional division of a given output refers to a point in time, his reference to the law that regulates this distribution refers to a dynamic law, as his critical remark that his predecessors, such as Turgot, Stuart, Smith, Say, Sismondi and others, had provided little satisfactory information ‘respecting the natural course of rent, profits, and wages’ (emphasis added, p. 5; all references to the Principles are from Ricardo 1951-52, Works I) testifies to. He further goes on to claim that without the knowledge of the true doctrine of rent, for which he gives credit to Malthus and Edward West, ‘it is impossible to understand the effect of the progress of wealth on profits and wages…’. Thus, according to Ricardo, a correct understanding of the theory of rent is central to the understanding of the law of distribution.
