A note on the secular trend of falling profit rates in Ricardo

Robert Nicol ()

Brazilian Journal of Political Economy, 1984, vol. 4, issue 4, 363-372

Abstract: The author analyses Ricardo’s proposition that for a one-commodity economy(a corn-producing economy) in the presence of a growing population and decreasing returnsin agriculture there would be a tendency for the rate of profits to fall. After showing that fora one-commodity economy Ricardo’s proposition and the demonstration he provided for hisproposition are both correct, the author analyses what would happen in a two-sector economy,that is, an economy with a stagnant agriculture and an industrial (or, perhaps, a commercial)sector subject to technological progress. With the aid of a Sraffa type of model itis shown that Ricardo’s proposition is correct even in this case, that is, in a closed economywhere agriculture is not subject to technological progress, even if the economy has other sectorswhere there are gains in productivity, a growing population leads to a fall in the rate ofprofits and eventually to stagnation in the economy. JEL Classification: Q10; O13.

Keywords: Economic growth; Ricardo; agriculture; industry; Sraffa; profit rate (search for similar items in EconPapers)
Date: 1984
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