Criticism of Ricardian Theory

Criticism of the Ricardian Theory of Rent:

Ricardo states that merely the best lands are cultivated first. There is no historical evidence for this.

1. According to Ricardo, land encompasses “original and indestructible powers”. However the fertility of land might decline after some time since of continuous cultivation.

2. Ricardo believed that rent is weird to land alone. However many modern economists argue that the rent feature can be seen in other factors such as labor and capital. Rent occurs whenever the supply of a factor is inelastic in relation to the demand for it.

3. Ricardo is of the view that rent does not come into price of the commodity generated in it. However rent enters the price from the point of view of a solitary firm.

4. Ricardian theory does not get note of scarcity rent.

5. It depends on perfect competition. Only beneath perfect competition, there will be one price for a good. However in the real world, we have imperfect competition.

However there are some criticisms against the Ricardian theory, we might note it states that as of increasing pressure on land, we have to cultivate inferior lands.

 

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