Theories of Profits

Discipline: Economics

The early classical economists believed that profits would eventually decline.

The Scottish economist Adam Smith (1723-1790) viewed the growth rate of capital accumulation (which took place at a rate higher than total output) as the cause.

The English economist David Ricardo (1772-1823) argued that a decline in the general rate of profit was caused by the diminishing marginal productivity of land.

The German political economist Karl Marx (1818-1883) believed that the rate of profit was influenced by the growth of competition between capitalists.

Source:
A Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (London, 1776);
D Ricardo, On the Principles of Political Economy and Taxation (London, 1817);
K Marx, Capital, i-ni (Harmondsworth, ,1976-81)

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