ABSTRACT
Davis (1993), in examining the implications of Ricardo’s addition of a chapter on machinery introduction to the third edition of the Principles, has suggested a modification of Ricardo’s original framework in which the role of land and labor as causes of differential productivity and rent are reversed. According to Ricardo’s machinery analysis, in the extreme case when machinery is perfectly substitutable for labor, wages cannot rise, and land thus ceases to play an important role in the economy. Suppose, then, that just as there are different soil fertilities, there are also different qualities of workers, which may also be ranked from most to least productive. Then, on Ricardo’s reasoning, inframarginal, higher-quality workers would receive rents by virtue of their monopoly ownership of their skills, while the lowest-quality workers would find themselves at the margin in the labor force earning no rents. This modified model is still Ricardian, because it relies on an inverse relation between rents and profits, but it departs from Ricardo’s original class setting by translating the contest between landlords and capitalists into a more modern one between workers and capitalists.
