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.