Who are the players involved in Ricardo’s story, and what is their compensation? Ricardo argues that there are three classes, the Landlords (landed aristocracy), the capitalists (large scale farmers, manufacturers, etc.), and the laboring class (workers). All three of these classes will provide input to the creation of a good, in Ricardo’s case, corn. When a good is sold, the proceeds of the sale are split amongst the three participating classes. Rent is paid to the landlords, wages are owed to the laborers, and the capitalist’s compensation is called profit. Although each party receives compensation, they are not evenly distributed. The reasoning for the uneven distribution of compensation is dependent upon a few guiding …show more content…
Regrettably for the capitalist, that is not the only tension that they face in this system. The tension with the landowning class is exasperated by the dynamics and tensions at play with the laboring class. Worker compensation has the immovable floor of subsistence wage levels. Thus, as the expense to grow corn or produce other goods rises (due to the falling productivity of land) prices will rise. With these inflationary pressures workers will require higher compensations, causing the capitalists to raise wages for the laborers to continue their subsistence; negating the potential profit gains from selling at higher prices. Whereas this line of thinking could easily start an inflation-wage spiral, Ricardo explains why this is not the case when he says “but this cannot be the case; […] or it could not be sold for £5,000, for out of the £5,000 must be paid the profits of the stock which employed the men,” (1.69). The price of goods already comes with profits built into their sale value. Consequently with nominal wages rising it bites into the profit of the capitalists. Though this may be a point of tension between two classes, from the capitalist’s perspective the necessity for workers to at least be able to afford food is just a responsibility they must bear in this