ABSTRACT
My concern in this paper is to confirm the validity of the attribution to Ricardo of a growth model entailing secularly declining real wages. In this model both the real-wage and profit rates are above their respective minima during the course of expansion; and both decline to those minima in consequence of the pressures exerted by increasing land scarcity (e.g. Tucker 1960, 110–16; Casarosa 1985; Hollander 1987). This interpretation – the so-called ‘New View’ – has been rejected by various commentators in favour of a subsistence-wage growth model (cf. Pasinetti 1960; Stigler 1981; Peach 1988). There is a danger that the protagonists will speak past each other, and fail to bring the issue to a conclusion. This would be unfortunate, for there is strong evidence – not yet all taken into account -pointing to the variable-wage interpretation. That interpretation is preferable (1) because, unlike the alternative, it satisfies certain minimum, common sense, requirements of textual exegesis, and (2) because the alternative is subject to serious analytical error.
