Ricardo's Early Treatment of Profitability

I will deal first with Professor Hollander's objection to my reading of Ricardo's letter to Malthus of i i August I8I4; and with his startling claim to have 'readily accept[ed] the corn calculation' in Ricardo's correspondence of I8I4' (I986, p. IQ99). The passage from the letter in question begins: ' Individuals do not estimate their profits by the material production, but nations invariably do' (Works vi, p. I2I). In my article (I984, p. 737) I took this as a response to Malthus's point that: ' In no case of production, is the exactly of the same nature as the capital advanced. Consequently we can never properly refer to a material rate of produce' (Works vi, p. I I 7). The salient features of Ricardo's reply are, first, that he does not mention, let alone defend, the assumption of capital-product homogeneity, which casts doubt on Sraffa's interpretation (Works i, p. xxxi); and secondly, that he does defend the measurement of 'profits' (the net social surplus) in material terms. Hollander complains that the passage from Ricardo 'in fact says nothing about the profit rate or profit share' (I986, p. 4, his emphasis). This is true, and instead of drawing the inference that 'any previous reference by Ricardo to a material rate of produce was based on the representation of the profit share in physical terms' (I984, p. 737, emphasis added) I should have said simply 'profit' or 'net surplus'. This does not make a fundamental difference to my interpretation. Hollander also underlines my observation that Ricardo did not restrict the 'material' estimation of profits to the agricultural sector. But Ricardo's argument that nations ' invariably' estimate profit in material terms can be read as a justification for using the technique in a more ' unusual' context, specifically in the treatment of agriculture which was, after all, the sector to which Malthus was apparently referring when he made his objection about the 'material rate of produce' (Works VI, pp. I I 7-8). I therefore stand by my interpretation (or ' tortuous meandering' as Professor Hollander so colourfully describes it: I986, p. I093). Which brings me to the 'readily accept[ed]' corn calculation that Hollander would put in its place. Until Hollander (I983), the textual basis for attributing the calculation was confined to Ricardo's letter of 25 July I 8 I 4 (Works VI, pp. I I 4-5). Leaving aside, temporarily, the validity of this evidence, it is relevant to consider Hollander's reaction(s) to his discovery. In Hollander (I973) the calculation is described as 'a rather casual and

Economics · Mathematical economics · Profitability index · Economic Theory and Institutions · Economic Theory and Policy · Finance · Philosophy · Political Economy and Marxism

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