The Ricardian rent theory: an overview

CSWP 8 (November 2014)

Author Christian Bidard

Keywords Classical theory, land, rent, Ricardo, Sra¤a

JEL B12, B51, C61, D33

We propose to re-read Ricardo's theory of rent to which, we claim, the post-Sraffian literature is methodologically unfaithful. Ricardo's dynamic approach follows the transformations of a long-term equilibrium with demand. Sraffa adopted the same framework while substituting a value criterion for a physical criterion to determine the incoming marginal method, but he did not state the law of succession of methods explicitly. This prevented him to realize that his critique to Ricardo opens the door to all complications of capital theory, with the consequence that the Ricardian dynamics fail when a divergence appears between profitability and productivity. Contemporary studies have cast doubts on the validity of some of Ricardo's and Sraffa's over-optimistic conclusions, but the abandonment of the dynamic approach does not allow them to explain the ultimate reason of the phenomena they have pointed at Ricardo's method has been recently rediscovered by mathematicians.

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