ABSTRACT
This chapter explores the logical structure of the theories of production and income distribution developed by three major classical economists: Adam Smith, David Ricardo and Karl Marx. Production is regarded in all these theories as a circular process: the same commodities appear among both products and the means of production. This is the starting point to ascertain the existence of a surplus. Smith extends the origin of surplus to industry, that is, the new branch that emerged with the industrial revolution. All classical economists distinguish between ‘market prices’ and ‘natural prices’. Market prices are the prices that are actually observed on the market, day by day and, people could say, transaction by transaction. A link between market and natural prices is, however, envisaged by classical economists. A similar rule applies for other classical economists.
