Abstract

The author analyses Ricardo’s proposition that for a one-commodity economy
(a corn-producing economy) in the presence of a growing population and decreasing returns
in agriculture there would be a tendency for the rate of profits to fall. After showing that for
a one-commodity economy Ricardo’s proposition and the demonstration he provided for his
proposition are both correct, the author analyses what would happen in a two-sector economy,
that is, an economy with a stagnant agriculture and an industrial (or, perhaps, a commercial)
sector subject to technological progress. With the aid of a Sraffa type of model it
is shown that Ricardo’s proposition is correct even in this case, that is, in a closed economy
where agriculture is not subject to technological progress, even if the economy has other sectors
where there are gains in productivity, a growing population leads to a fall in the rate of
profits and eventually to stagnation in the economy.

JEL Classification: Q10; O13.