Page "Classical liberalism" Paragraph 33

David Ricardo, who was an admirer of Adam Smith, covered many of the same topics but while Smith drew conclusions from broadly empirical observations, Ricardo used induction, drawing conclusions by reasoning from basic assumptions.

While Ricardo accepted Smith's labour theory of value, he acknowledged that utility could influence the price of some rare items.

Rents on agricultural land were seen as the production that was surplus to the subsistence required by the tenants.

Wages were seen as the amount required for workers ' subsistence and to maintain current population levels.

According to his Iron Law of Wages, wages could never rise beyond subsistence levels.

Ricardo explained profits as a return on capital, which itself was the product of labour.

But a conclusion many drew from his theory was that profit was a surplus appropriated by capitalists to which they were not entitled.