Please enable JavaScript.

Coggle requires JavaScript to display documents.

Classical HET (Ricardo (1823) (theory of value (rent as differential…

- - - - difference between most and least productive land
        
        diminishing returns to land
        
        importing crops is favourable
        
        towards stationary state
    - - rate of profits must be the same (competition)
    - - ratios of embodied labour (direct and indirect)
        
        price is partially determined by profit rate
        
        changes in profit rates mirror changes in wages
        
        incomplete theory of relative prices
  - - - negatively impacts employment
      - lower production of subsistence goods
- - - - constrained by sympathy
        
        invisible-hand argument
        
        desire to be loved
      - unlimited liberties
        
        exception: no harm principle
        
        maximisation = invisible-hand argument
    - - division of labour
  - - - lobbying = inefficient allocation
      - majority interests are neglected
      - public jobs are unproductive
    - - national defence
      - administration of justice
      - administration of common goods
  - - - real price determination
        
        embodied labour
        
        primitive societies
        
        commanded labour
        
        complex societies
        
        embodied value (labour) + capital and land
        
        total costs of production
        
        prices as wages + profits
        
        profits = commanded labour > embodied labour
      - natural price
        
        wages + rent + profits
        
        circularity: wages need to be determined
        
        the market fluctuates around it (market price)
        
        changes in demand and supply
        
        competition as a compass
  - - - productivity factors
        
        division of labour (outcomes)
        
        improved individual skills
        
        reduction of time loss (no switching)
        
        technical progress
        
        alienation
        
        positive outcomes outweigh the negative
        
        market size (factors)
        
        average disposable income (Y/N)
        
        liberal policies (free markets)
        
        enhanced transports and communications
      - labour force
        
        productive
        
        production of goods
        
        surplus invested in production
        
        more wealth
        
        unproductive
        
        services
    - - wages depend on
        
        trust
        
        social prosperity
        
        risk
      - profits decrease as capital grows
        
        towards decreasing marginal utility
      - rents as a residue of prices (profits + wages)
- - - - workers
        
        labour -> wages
      - landlords
        
        land -> rent
      - capitalists
        
        capital -> profit
    - - no market intervention
      - natural price as optimal price
- - - - constraints: death and desease
  - - - higher production of goods per capita
  - - - higher population -> less food
      - stable population
      - "iron law of wages" (Ricardo)
        
        wage rate tends to oscillate around the subsistence level
- - - - materialisation of labour
      - social in nature
    - - a very particular commodity: it produces a net profit
      - labour is exploited when labour-power is turned into profits
        
        capitalists own means of production, among which labour-power (wages are paid)
        
        rate of profits increases with exploitation
        
        profits rise with variable capital (labour-power)
    - - classical tools
      - revolutionary ends
  - - - in the long run -> fall in profits
        
        less variable capital, which generates profits (labour-power)
        
        "inner contradictions" of capitalism
      - economic instability
        
        reduced variable capital -> reduced wages and unemployment -> lower consumption