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The Smithian origin of Ricardo's corn ratio theory of profits: a suggested interpretation

As is well known, P. Sraffa’s interpretation of Ricardo’s early theory of profits has it that the latter’s contention that ‘it is the profits of the farmer which regulate the profits of all other trades’ (Ricardo to Trower, 8 March 1814; VI, p. 104;1

quoted more fully in Section 3 below) finds its rational foundation in a ‘corn-ratio theory of profits’ (Sraffa, 1951a, pp. xxxiii and xlix), based on the simplifying assumption that

in agriculture the same commodity, namely corn, forms both the capital (conceived as composed of the subsistence necessary for workers) and the product; so that the determination of profit by the difference between total product and capital advanced, and also the determination of the ratio of this profit to the capital, is done directly between quantities of corn without any question of valuation.