David Ricardo
Classical economist (1772–1823) whose Law of Rent — rent as a price-determined differential surplus — is the analytical engine Henry George generalized, and whose formulation carried land as a distinct factor to the heart of economics for a century.
Overview
David Ricardo (1772–1823) was a British political economist and one of the most influential figures of the classical school. A successful stockbroker turned theorist (and later MP), his On the Principles of Political Economy and Taxation (1817) systematised the analysis of value, wages, and — most importantly for Georgism — rent.[1] In the standard history of the discipline, Ricardo's rent chapter also marks the first appearance of the marginal principle in economic theory (Blaug, Ch. 3).[2]
The Law of Rent
Ricardo's Law of Rent is the analytical backbone of land economics. He observed that the rent of land is a differential surplus: it arises because land varies in fertility and location, and the market price of produce is set by the cost of production on the least productive (marginal) land in use. Producers on better land earn a surplus above that margin, and this surplus is rent — captured by the landowner, not by labour or capital (law of rent; margin of production).[1]
The crucial implication: rent is price-determined, not price-determining. Landowners do not set rent by adding it to costs; rent is the residual that emerges from competition. A tax on that residual therefore cannot be passed forward — the theoretical root of the wiki's incidence outcome (landlords cannot pass LVT to tenants).
Politics: the Corn Laws
Ricardo's theory was forged in the Corn Law fight: tariffs on imported grain raised food prices, which — by his own law — flowed through to landowners as higher rents while squeezing profits and wages. His free-trade campaigning against the landed interest made rent theory politically explosive from birth, a lineage Henry George consciously continued and Fred Harrison's Ricardo's Law revives for the modern tax system (the claim that public spending flows back to landowners as rent).[1][3]
Significance for Georgism
Ricardo gave George his analytical engine. The law of rent explains why economic progress raises land values without raising wages — the puzzle Progress and Poverty set out to solve — and why a tax on rent falls on a surplus that exists regardless of the tax.[1] The later neoclassical merger of land into capital displaced Ricardo's three-factor frame; Blaug's history records mainstream economics concluding there is no "need for a special theory of ground rent" — precisely the move Georgists contest.[2]
See Also
- Law of Rent · Economic Rent · Margin of Production
- Henry George · Unearned Increment
- Harrison, Ricardo's Law (book) — the modern polemical revival
- Blaug, Economic Theory in Retrospect (book) — the mainstream historiography
Sources
- David Ricardo (1817), On the Principles of Political Economy and Taxation, esp. Ch. 2 "On Rent" — used for the law of rent, its implications, and the Corn Law context (A-claims). Full text
- Mark Blaug, Economic Theory in Retrospect (5th ed., 1997), Ch. 3 — used for the marginal-principle historiography and the mainstream verdict on rent theory (A-claims; scan provenance pending owner attestation — see book page). Book page
- Fred Harrison (2006), Ricardo's Law — used for the modern revival claim (D-claim, attributed). Book page