Abstract
This expression is commonly used to denote Sraffa’s interpretation of the theory of profits formulated by Ricardo in his 1815 Essay on Profits. The characteristic feature of this theory is that in the production of corn there is a physical homogeneity between capital and product, because capital (which Ricardo tends to identify with the wages paid in the year) is conceived as entirely consisting of corn. Consequently the rate of profits in agriculture (production of corn) only depends upon the conditions of production of corn, and the amount of corn constituting the wage rate, and is determined independently of prices. The rate of profits of the other sectors will have to adjust to that of agriculture, by means of variations of the price of their product relative to corn. If r is the rate of profits established in agriculture, w the (corn) rate of wages, and Li the number of workers employed in the production of commodity i, the price of i in terms of corn will be:
where pi is the only unknown.
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de Vivo, G. (2018). Corn Model. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_109
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DOI: https://doi.org/10.1057/978-1-349-95189-5_109
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