Any discussion of David Ricardo's theory of value requires a consideration of the broader spectrum of Ricardian economic theory. Of particular significance in this context are those theoretical constructs related to production, prices, and growth.
Ricardo was described by Karl Marx as an economist who tended to focus on "production alone," having "defined distribution as the exclusive object of economics," because he "conceived the forms of distribution as the most specific expression into which the agents of production of a . . . society are cast." Marx was not completely correct in his assessment of Ricardo because Ricardo did consider demand in his theories and analyses. Ricardo, however, did not emphasize demand to the same extent that he did production and distribution. Marx was thus correct when he stated that Ricardo's body of theory was heavily related to the problem of distribution and its implications for growth within an economy.
Although Ricardo and Malthus disagreed on many interpretations of economic theory and explanations of economic events, Ricardo "acknowledged his debt to . . . Malthus," with respect to an earlier description by Malthus of the principle of diminishing returns and with respect to Malthus' law of population. Malthus' theory relating population growth with growth in productive capacity was used by Ricardo as a base for his demand increase theory. Ricardo stated that the "rate of profits and of interest must depend on the proportion of production to the consumption necessary to produce such consumption." He also believed that profits were governed by agricultural productivity.
Sraffa's interpretation of Ricardo with respect to profit held that agricultural profit determines the general rate of profit in an economy. The general scenario is that a rise in the price of the manufacturing input (occurs)-- capital in the form of agricultural wage goods--as the corn price r...