ABSTRACT
Ricardo after Sraffa In the preface of the Principles (1817), Ricardo states that the main problem of Political Economy concerns the distribution of income among the three classes of society: the capitalists, the workers and the landowners, who receive the profits, the wages and the rents, respectively.1 When rent is discarded, the tradeoff between wages and profits becomes apparent. Nowadays, that trade-off is often coined as ‘Ricardian’, partly under the influence of Sraffa’s (1960) book which carries out an analysis devoted mainly to the study of single-product systems without land: the questions of land and rent are only tackled at the end of Production. The reversal, due mainly to analytical reasons, makes the tradeoff between profits and rents less apparent than in the Principles. In the conditions prevailing at the beginning of the nineteenth century, with a working class still unorganised, the social and economic struggle between capitalists and landowners was at the core of political life. For Ricardo, the stake of the corn laws was the very future of capitalism, which requires an increase in the industrial workers’ population and, indirectly, in the supply of agricultural products. But new lands of mediocre quality can be only exploited after a sufficient rise in the corn price. The owners of high-grade lands take advantage of the price increase (Ricardo stressed that the increase in rent is the effect, not the cause, of the increase in the corn price) and the rise in rents results in a decrease in profits. The threat for the development of capitalism explains the importance of the question of distribution. The most remarkable analytical developments stemming from Ricardo’s ideas are due to Sraffa, even if Sraffa, who is aware of the complex behaviour of multisector models, criticises Ricardo for considering the grade of a land as a physical characteristic, whereas in most cases the ranking of lands depends on distribution. In this study we follow Sraffa’s formalisation but return to an approach closer to Ricardo’s spirit, i.e. we look at the consequences of an extension of cultivation, even if the model remains non-dynamic (we only compare steady states). The real wage being represented by a given basket incorporated into the physical inputs of production, the change in distribution between profits and rents is endogenous. Not surprisingly in view of the post-Sraffian literature,
we will distinguish the cases of ‘extensive’ and ‘intensive’ cultivations that the classical economists had identified but considered as similar phenomena. The post-Sraffian developments have shown that taking extensive rent into account does not set any serious analytical problem,2 whereas intensive cultivation leads to the loss of some usual properties. Our thesis is that the post-Sraffian literature has identified the existence of difficulties but the origin of the discrepancy remains unclear. The study of extensive rent shows that the extension of cultivation obeys simple laws. For that of intensive rent, we proceed from the preliminary examination of the corn-land model: corn and land are then assumed to be the only inputs of production. We dare attribute such a model to Ricardo, or at least we consider it as a way to rationalise his views on the question of rent. The main value of the corn-land model lies in its simplicity. By contrast, a multisector model à la Sraffa keeps industrial relationships into account. We adapt Sraffa’s formalisation to the Ricardian hypothesis of a given real wage. Thus profits and rents are the only distribution variables, which are determined endogenously by the level of demand for corn. Since our aim is to clarify the origin of a difficulty and its consequences, we will avoid drowning the reader in calculations.
