Blackwell Reference Online

Extract

The economy that the classical economists from William Petty to David Ricardo experienced typically generated an annual social surplus , which was distributed amongst the propertied classes in the form of rents or profits, and was used for the purposes of consumption and capital accumulation. The surplus refers to those quantities of the different commodities that were left over after the necessary means of production used up and the means of subsistence in the support of workers had been deducted from the gross outputs produced during a year. In this conceptualization, the necessary real wages of labor were considered no less indispensable as inputs and thus agents of production than raw materials, tools, or machines. What became known as the “surplus interpretation” of the classical economists focuses attention on the mature classical economists' approach to how the surplus is distributed and which system of exchange values of the different commodities can be expected to emerge as the result of the gravitation of “market” or “actual” prices to their “natural” or “ordinary” levels, or “prices of production.” In conditions of free competition - that is, in the absence of significant barriers to entry and exit from markets - prices can be taken to oscillate around levels characterized by a uniform rate of profits on the value of the capital advanced at the beginning of the uniform ... log in or subscribe to read full text