David Ricardo
Classical economist (1772–1823) whose Law of Rent provided the theoretical foundation Henry George later built upon.
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, his On the Principles of Political Economy and Taxation (1817) systematised the analysis of value, wages, and — most importantly for Georgism — rent.
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.
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. This is the result Henry George generalised from agriculture to the whole economy in Progress and Poverty.
Significance for Georgism
Ricardo gave George his analytical engine. The Law of Rent explains why economic progress raises land values without raising wages, and why a tax on rent cannot be passed on — it falls on a surplus that exists regardless of the tax.
See Also
Sources
- David Ricardo (1817), On the Principles of Political Economy and Taxation, esp. Ch. 2 "On Rent." Full text