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Essay / Compare and contrast Adam Smith, the father of modernity...
Furthermore, David Ricardo continued the idea that the economy generally tends to grind to a halt. He based his analysis on Adam Smith's labor theory of value. He believed that the amount of property society can obtain depends on the amount of labor needed to support farmers who own "the most barren lands that can still sustain agriculture." Depending on the fertility rate of the land, the amount of rent received varies: the more fertile the land, the higher the rent, while the poorest land receives practically no rent, because it is used to cover the cost of the land. labor and capital. As the population increases, less fertile land must be cultivated to satisfy increasing demand and, according to Ricardo, agricultural land has no other use. Rental prices for decent land are increasing. Ricardo suggests that when capital accumulates, rents tend to increase but profits decrease. As profits lead to reinvestment and, therefore, growth, rising rent costs indirectly prevent economic progress. According to Ricardo, the corn laws are another obstacle to economic growth, because trade barriers have artificially raised food prices. Here he shared the same opinion with Smith: government interference prevents the economy from self-regulating and the market is best when untouched, even if imperfect. Even if Ricardo was not completely