The Extension of Cultivation

Ricardo after Sraffa In the preface of the Principles (1817), Ricardo states that the main problem of Political Economy concerns the distribution of income among the three classes of society: the capitalists, the workers and the landowners, who receive the profits, the wages and the rents, respectively. When rent is discarded, the trade-off between wages and profits becomes apparent. Nowadays, that trade-off is often coined as 'Ricardian', partly under the influence of Sraffa’s (1960) book which carries out an analysis mainly devoted to the study of singleproduct systems without land. Contrary to the Principles, the questions of land and rent are only tackled at the end of Production. This reversal is due to analytical reasons, but the transfer makes the trade-off between profits and rents less apparent than in the Principles. In the conditions prevailing at the beginning of the XIXth century, with a working class still unorganised, the social and economic struggle between capitalists and landowners was at the core of political life. For Ricardo, the matter at stake on the issue of the corn laws was the very future of capitalism, which requires an increase in the industrial workers’ population hence, indirectly, an increase in the demand for corn. But new lands of mediocre quality can be only exploited after a sufficient rise in the price of corn. The owners of high-grade lands take advantage of the price increase (Ricardo stresses that the increase in rent is the effect, not the cause, of the increase in the price of corn) and, finally, the rise in rents results in a decrease in profits, for exogenously given wages. Hence a threat for the development of capitalism, and this is why distribution is an essential problem of political economy. Among the analytical developments stemming from Ricardo’s ideas, the most remarkable are those of Sraffa, even if Sraffa, who is aware of the complex behaviour of multisector models, implicitly criticizes Ricardo and other economists for having considered that the grade of a land is defined in absolute terms, according to physical characteristics, whereas in most cases the classification of lands depends on distribution. In this study we follow Sraffa's formalization but return to an approach closer to Ricardo’s spirit, i.e. we look at the consequences of an extension of cultivation due to an increase in the demand for corn. The real wage being represented by a given basket incorporated into the physical inputs of production, the change in distribution between profits and rents is endogenous. The model, however, remains non-dynamic and we only compare steady states. Not surprisingly in view of the post-Sraffian literature, the main point concerns the difference of economic behaviour between the cases of 'extensive' and 'intensive' rents, that the classical economists had identified but considered as similar phenomena. The post-Sraffian developments have shown that taking extensive rent into account does not set any new problem with regard to the singleproduct case, whereas intensive cultivation leads to the loss of some usual properties. Our thesis is that the post-Sraffian literature has identified the existence of difficulties, but that the origin of the discrepancy remains unclear. The study of extensive rent shows that the extension of cultivation, for a given wage, obeys simple laws. For that of intensive rent, we proceed from the preliminary examination of