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A Remark on Intensive Differential Rent and the Labour Theory of Value in Ricardo

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  • Saverio M. Fratini

Abstract

One of the foundations of the labour theory of value used by Ricardo in the Principles is that rent does not enter into commodity prices. In response to objections raised by Malthus and Say, Ricardo defended this idea by arguing that even where all cultivated land pays rent, the last dose of capital employed on the land does not and no rent is therefore involved in the price of the product of this capital. We will show that this claim, which has been believed true by several generations of economists, is based on a misleading argument and in fact incorrect. In particular, we will show that the intensive differential rent paid on land of the worst quality under cultivation enters into the agricultural product price and so, even in the most favourable case, commodities are no longer exchanged at a ratio corresponding to the relative quantities of labour they embody.

Suggested Citation

  • Saverio M. Fratini, 2009. "A Remark on Intensive Differential Rent and the Labour Theory of Value in Ricardo," Departmental Working Papers of Economics - University 'Roma Tre' 0100, Department of Economics - University Roma Tre.
  • Handle: RePEc:rtr:wpaper:0100
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    File URL: http://host.uniroma3.it/dipartimenti/economia/pdf/WP100.pdf
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    References listed on IDEAS

    as
    1. Kurz,Heinz D. & Salvadori,Neri, 1997. "Theory of Production," Cambridge Books, Cambridge University Press, number 9780521588676, January.
    2. George J. Stigler, 1952. "The Ricardian Theory of Value and Distribution," Journal of Political Economy, University of Chicago Press, vol. 60, pages 187-187.
    3. Kurz, Heinz D, 1978. "Rent Theory in a Multisectoral Model," Oxford Economic Papers, Oxford University Press, vol. 30(1), pages 16-37, March.
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    Cited by:

    1. Bidard, Christian, 2014. "The Ricardian rent theory: an overview," Centro Sraffa Working Papers CSWP8, Centro di Ricerche e Documentazione "Piero Sraffa".

    More about this item

    Keywords

    differential rent; labour theory of value; methods of production; Ricardo; Sraffa; Smith;

    JEL classification:

    • B12 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Classical (includes Adam Smith)
    • D46 - Microeconomics - - Market Structure, Pricing, and Design - - - Value Theory

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