A remark on intensive differential rent and the labour theory of value in Ricardo

Saverio Fratini

MPRA Paper from University Library of Munich, Germany

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.

Keywords: differential rent; labour theory of value; methods of production; Ricardo; Sraffa; Smith (search for similar items in EconPapers)
JEL-codes: B12 D46 (search for similar items in EconPapers)
Date: 2010-06
New Economics Papers: this item is included in nep-hpe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://mpra.ub.uni-muenchen.de/30144/1/MPRA_paper_30144.pdf revised version (application/pdf)

Related works:
Journal Article: A Remark on Intensive Differential Rent and the Labour Theory of Value in Ricardo (2012)
Working Paper: A Remark on Intensive Differential Rent and the Labour Theory of Value in Ricardo (2009)
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