d Taxation, which was published in 1817, Ricardo was primarily concerned with the formulation of laws which regulate the distribution of economic product within an economy (Ekelund and Hebert 130-137). To accomplish this purpose, he developed a model based on the predominantly agricultural economy of his day. Ricardo contended that costs and profits were the same on all land, regardless of its marginal productivity. He contended further 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.
Ricardo was described by Karl Marx (160) 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.
Later on, the law of markets was formulated by Jean-Baptiste Say. Say's law held that an under-utilization of resources could not occur. Based in great part on this contention, most economists prior to John Maynard Keynes contended that prolonged economic depressions could not occur (Ekelund and Hebert 434-436). Keynes challenged this contention, and the economic decline of the 1930s proved Keynes' point.
Neo-classical economic theory began to develop in the late-19th C. (Hausman 33). Neo-classical theory emphasizes supply, and demand is vi...