icardo contended that costs and profits were the same on all land, regardless of its marginal productivity. He further contended that, as labor cost the same, regardless of which land on which it was applied, it would encourage capital to be invested at the place of highest return, until the process of diminishing returns caused profits on all cultivated land to become equal.
According to Ricardo, as costs and profits were the same on all cultivated land, a surplus was earned on non marginal land. Ricardo called this surplus earned on non marginal land "rent." Ricardo thought that the consequence of this relationship was that, as the population expanded and less fertile land was brought under cultivation, profits became squeezed by (1) an increasing proportion of total output which was allocated to rent, and (2) the basic minimum level of subsistence which was allocated to labor wages.
Ricardo was described by Karl Marx (1858, p. 160) as an economist who tended to focus on "production alone," having "defined distribution as the exclusive object of econ
...