In a letter to Malthus written on August 15, 1820, speaking of his own theory of value and of McCulloch’s, he despairingly adds: “Both of us have failed.” See Halévy, Le Radicalisme philosophique, and Hector Denis, op. cit.
[316] Smith had likened industry to a household with two children—wages and profits; agriculture to a household with three—wages, profits, and rent.
[317] An Inquiry into the Nature and Progress of Rent (1815).
[318] It is necessary to remember, however, that the old theory survived and appears here under the very name of Ricardo, for he was unsuccessful in freeing himself altogether from its influence. He defines rent as “that portion of the produce of the earth which is paid to the landlord for the use of the original and indestructible powers of the soil.” He continually refers to these powers of the soil, which are described as “natural,” “primitive,” “indestructible,” i.e. as independent of all labour.
[319] “Nothing is more common than to hear of the advantages which the land possesses over every other source of useful produce on account of the surplus which it yields in the form of rent. Yet when land is most abundant, when most productive and most fertile, it yields no rent, and it is only when its powers decay … that rent appears.” (Principles, ed. Gonner, p. 52.)
[320] “The labour of Nature is paid, not because she does much, but because she does little. In proportion as she becomes niggardly in her gifts she exacts a greater price for her work.” (Ibid., p. 53, note.)
“The comparative scarcity of the most fertile lands is the cause of rent.” (Ibid., p. 395.)
Adam Smith had already offered this as an explanation in the case of the products of the mine, but he failed to see that arable land is really nothing but a sort of mine.
[321] To-day we simply say that it is determined by increased demand. But this is quite contrary to Ricardo’s views, for in his opinion it is labour and not demand that creates value.
[322] “The value of corn is regulated by the quantity of labour bestowed on its production on that quality of land [or with that portion of capital] which pays no rent.” (Principles, ed. Gonner, p. 51.)