chapter  25
19 Pages

KNOWLEDGE, TRADE AND GROWTH

WithAlvin Birdi

Ricardo’s ardent opposition to the Corn Laws was due to his firm conviction that the rate of profit would inevitably fall if his thesis on diminishing returns to agricultural investment which he had outlined in his Essay on the Influence of a Low Price of Corn (Ricardo 1815) was correct. A free trade in corn, on the other hand, was a sure method by which to arrest decreases in the rate of profitability since it held in check the inevitable rises in the price of corn that would impact on the wage rate and thus on general profits. In the absence of a free trade in corn the prognosis was that accumulation would eventually cease, culminating in stagnation.