Q.1
There are both comparisons and variances between David Ricardo's and Karl Marx's perspectives of the labor theory of value. First we shall review Ricardo’s approach, and then we will contrast it to Marx’s.
Ricardo believed that prices were equal to wages + profit (rent zero) because wages and profits determined prices while on the other hand prices determined rent.
For Ricardo, labor that was embodied in commodities mainly determined the prices, and prices were equal to labor embodied (value) only when capital to labor ratios were the same across industries.
In total contrast to what Ricardo stated, Marx clearly stated that the prices of production (that is, c + v + s) were going equal to dead labor . Rather than dividing between the …show more content…
By this time, the old classical system was dead and buried, a new political and economic system was arising. So what was marginal revolution?
Marginal revolution brought forward some new ideas which helped in replacing the classical ideas which were no longer relevant to the society. It coined the idea of taking person’s preferences into account, before valuing a good. This gave rise to the modern concept of marginal utility.
Classical economists were going obsolete due to a variety of reasons including:-
1.Their political inclinations, the influence they wield, often created unrest.
2.Capitalism was booming along with dissatisfaction among the working class.
3.Classical economists though sympathetic towards the condition of working class, were too much concerned with the idea of uneven distribution and concept of wealth,but failed to come up with economic ideas which would be successful in long term in elimination of this division on social and economic level.
i.It was certainly a necessity to reject the classical view because of the following …show more content…
This will itself decrease savings and thus lead to a decrease in investment and thus reducing capacity consequently. On the other hand, the price of consumer goods would decrease, therefore increasing p (p = pk/pc) so that pXk rises and so too does wage and rental incomes from payments in the capital goods sector. This will raise consumption. The Thomas Malthus was correct for short run crises. This is not correct in long run. Now, to secure his position, Malthus came up with : "The question of a glut is exclusively whether it may be general, as well as particular, and not whether it may be permanent as well as temporary...[The] tendency, in the natural course of things, to cure a glut or scarcity, is no more a proof that such evils have never existed, than the tendency of the healing processes of nature to cure some disorders without assistance from man, is a proof that such disorders never existed." (T.R. Malthus, 1827: p.62-3) This shows that the central characters were really speaking at fractious purposes. Ricardo was completely worried about the long run possibilities of "secular stagnation" whereas Malthus appears to be more anxious with the sheer possibility of general gluts existing in the short-run and, obviously, that being a definite,
There are both comparisons and variances between David Ricardo's and Karl Marx's perspectives of the labor theory of value. First we shall review Ricardo’s approach, and then we will contrast it to Marx’s.
Ricardo believed that prices were equal to wages + profit (rent zero) because wages and profits determined prices while on the other hand prices determined rent.
For Ricardo, labor that was embodied in commodities mainly determined the prices, and prices were equal to labor embodied (value) only when capital to labor ratios were the same across industries.
In total contrast to what Ricardo stated, Marx clearly stated that the prices of production (that is, c + v + s) were going equal to dead labor . Rather than dividing between the …show more content…
By this time, the old classical system was dead and buried, a new political and economic system was arising. So what was marginal revolution?
Marginal revolution brought forward some new ideas which helped in replacing the classical ideas which were no longer relevant to the society. It coined the idea of taking person’s preferences into account, before valuing a good. This gave rise to the modern concept of marginal utility.
Classical economists were going obsolete due to a variety of reasons including:-
1.Their political inclinations, the influence they wield, often created unrest.
2.Capitalism was booming along with dissatisfaction among the working class.
3.Classical economists though sympathetic towards the condition of working class, were too much concerned with the idea of uneven distribution and concept of wealth,but failed to come up with economic ideas which would be successful in long term in elimination of this division on social and economic level.
i.It was certainly a necessity to reject the classical view because of the following …show more content…
This will itself decrease savings and thus lead to a decrease in investment and thus reducing capacity consequently. On the other hand, the price of consumer goods would decrease, therefore increasing p (p = pk/pc) so that pXk rises and so too does wage and rental incomes from payments in the capital goods sector. This will raise consumption. The Thomas Malthus was correct for short run crises. This is not correct in long run. Now, to secure his position, Malthus came up with : "The question of a glut is exclusively whether it may be general, as well as particular, and not whether it may be permanent as well as temporary...[The] tendency, in the natural course of things, to cure a glut or scarcity, is no more a proof that such evils have never existed, than the tendency of the healing processes of nature to cure some disorders without assistance from man, is a proof that such disorders never existed." (T.R. Malthus, 1827: p.62-3) This shows that the central characters were really speaking at fractious purposes. Ricardo was completely worried about the long run possibilities of "secular stagnation" whereas Malthus appears to be more anxious with the sheer possibility of general gluts existing in the short-run and, obviously, that being a definite,