Question

• Ricardo states that the principal problem in political economy is to determine the laws which regulate the distribution of the produce of earth among social classes. Why, you believe, he felt a need to constrain the scope of economics after Smith?

Answer 1

Produce of earth being a combined application of land, machinery and labor is divided among the owner of the land (landlord), owner of capital required for production and the laborers who render their services necessary in production.

But in a society that is influenced by political rules, the distribution of this output / produce depends upon political laws and regulation imposed by authorities. The distributed produce in the name of wages, rent and profits depends on various factors and to determine the laws and political imposed regulations is the problem of political economy.

For instances, In an agricultural land, a person who owns the land is entitled of rent, and at times, the entire resulting produce that is harvested from the same land by peasants and other laborers. The distribution is done in a way that the man who just owns the land gets a majority portion of the entire produce including his rent, whereas the peasants are just paid off their wages for their work done on the field. This system of distribution of produce is in place due to the existing legal rules and regulations put up by political authorities that enables the landlord to acquire his rent as well as a portion of the produce.

In another example, say that a man owns a building and chooses to rent it for a person who wishes to manufacture garments by setting up machines and hiring labors for the same. The man who owns the building is only paid his rent as he is only entitled of rent by the law that enforces such a rule. The person who manages the factory, owns the produce and sells its off in efforts to make profits and the workers in the factory are paid their wages. In this distribution, the pattern is different from that of the previous one discussed about an agricultural land.

Distribution of total produce differs from government to government as the rules put up influences said distribution to a greater extent. Ricardo saw this issue of political problem in a politically influenced economy and thus he felt a need to constrain the scope of a political economy.