A Remark on Intensive Differential Rent and the Labour Theory of Value in Ricardo

One of the foundations of the labour theory of value used by Ricardo in the Principles is that rent does not enter into commodity prices. In response to objections raised by Malthus and Say, Ricardo defended this idea by arguing that even where all cultivated land pays rent, the last dose of capital employed on the land does not and no rent is therefore involved in the price of the product of this capital. We will show that this claim, which has convinced several generations of economists, is based on a misleading argument. In particular, we will show that the intensive differential rent paid on land of the worst quality under cultivation enters into the agricultural product price and so, even in the most favourable case, commodities are no longer exchanged at a ratio corresponding to the relative quantities of labour they embody.