Falling Rate of Profit

(18th-19th century)

Falling rate of profit was held by all leading classical economists except the English writer Thomas De Quincey (1785-1859).

Scottish economist Adam Smith (1723-1790) regarded the decline in profit as a result of 'the competition of capitals' whereas English economist David Ricardo (1772-1823) noted that diminishing returns in agriculture raised the real wage and reduced profits with which wages were inversely related.

Also see: theories of profits

Source:
A Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (London, 1776);
D Ricardo, On the Principles of Political Economy and Taxation (London, 1817)

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