The Structure of Wages and Ricardian Wage Theory

Extract

The purpose of this note is to demonstrate a fundamental inconsistency between Ricardo's theory of wages and his treatment of the occupational structure of wages. This inconsistency arises on two levels'that of the economic reality of Ricardo's day and that of Ricardo's own theoretical schema. It is the latter that will concern us. The importance of Ricardo's theory of wages in the whole Ricardian system is too well-known to require substantiation here. Whether, or to what extent, Ricardo himself was aware of the flaw to be described, is a moot question. His treatment was masterly from the stand-point of avoiding facing up to the inconsistency. At least, those who followed immediately in his footsteps never noticed it, and indeed, it has gone largely unremarked by modern students of Ricardo's work.