An introduction to David Ricardo's Law of rent from his 1817 "The Principles of Political Economy and Taxation". Ricardo recognised that land rent was only ever a relative quantity. In this presentation Ricardo's original line of argument is presented and updated to include the impact of a land market working in a closed environment.
Since land is necessary for most human pursuits, access to land is a key to productive pursuits. The value of land land in this situation is the difference between the value of the productive activity and the labour costs involved.
This gives rise to the recognition that land value is a RESIDUAL. It is what is left (the residual) when labour and capital costs are subtracted from the value of production. Closely related to his Law of Rent, was Ricardo's Law of Wages which asserted that in a perfect labour market wages would be competed down to their normal cost, which is the subsistence cost of the economic labour unit (the family or household). Ricardo did not engage with the social determination of what subsistence means for any particular society, which his critics have picked up. Despite this, criticism of his 'laws' tend to be ad hominem attacks on Ricardo or red herring distractions from their central points.
That is, the core principles within Ricardo's laws of rent and wages retain their importance, despite them being relatively general in scope and failing to consider various specific qualifications.
This presentation covers the core elements of Ricardo relating to wages and land rent as an introduction to his insights into the behaviour of land values.
