On David Ricardo's Theory of Profits:

The Laws of Distribution Are 'Not Essentially Connected with the Doctrine of Value,'

抄録

Abstract: The paper grew out of discussions with Japanese colleagues about Ricardo’s theory of profits on the occasion of a meeting at Meiji University in September 2009. It is argued that from an early time onwards Ricardo was convinced that the rate of prof- its could be ascertained in purely physical terms, without any question of valuation. Unfortunately, he was not given the time to translate this vision into a coherent and general theory. However, the vision permeates all his consecutive attempts at formu- lating such a theory-from the early ‘corn-ratio theory’ via the Essay on Profits to the Principles. The theory was meant to be general, taking into account all industries of the economy and paying due attention to their relationships. Ricardo understood that when it comes to the determination of the rate of profits, only those industries matter, which directly or indirectly contribute to the production of ‘necessaries,’ or wage goods, whereas industries that produce ‘luxuries’ do not. The concept of ‘corn,’ a com- posite commodity, was designed to reflect the set of industries producing necessaries. The surplus of necessaries over the amounts of them employed in production as capi- tal gives the rate of profits as a physical ratio. Ricardo’s ‘fundamental law of distribu- tion’ expresses the inverse relationship between the general rate of profits, conceived in this way, and real wages. It was Piero Sraffa who finally managed to elaborate a coherent and comprehensive theory of profits that confirmed Ricardo’s vision that the laws of distribution are ‘not essentially connected with the doctrine of value’ and overcame the shortcomings of Ricardo’s analysis. JEL classification numbers: B 24, D 33, D 51.