On the Ricardian Theory of Value: A Note

The Author responds to Eygelshoven and Kuipers (1981) criticism regarding an assertion made by the Author in “A Mathematical Formulation of the Ricardian System” (RES 1960, p.84). The assertion is that , in a Ricardian model with uniform capita intensity all over the economy, value is not affected by changes income distribution. Eygelshoven and Kuipers admit that , in what the Author calls a Ricardo’s “market” equilibrium, relative prices are proportional to relative quantities of labour independently of income distribution. Eygelshoven and Kuipers do not dispute that in the Author’s formulation of the Ricardian system, prices are explained by a pure labour theory of value nor that the explanation is entirely independent of income distribution. They argue that the number of laborers entering the (corn) industry is a continuous function of the wage rate and is not independent of income distribution. The Author argues that the relation between the number of workers and the wage rate, in a Ricardian system, is more complex that what Eygelshoven and Kuipers describe. He goes on to affirm that the difficulty they raise is created by the habit (inherited by marginal economics) of always using continuous functions. Furthermore, the point made by Eygelshoven and Kuipers is not very helpful since Ricardian logic focuses attention on the dependence, not independence, of value on any change in income distribution.