Ricardo's Theorems on Relative Prices a Note on Prof. Morishima

Abstract

It is argued that Prof. Morishima's treatment of Ricardo's theorems concerning relative price movements following changes in income distribution cannot count as a reasonable interpretation of Ricardo. Firstly, Ricardo linked up these price movements not only to diverging capital intensities, but also to diverging depreciation rates. Secondly, Prof. Morishima's proof seems to depend on a technology specification which is also characteristic of Sraffa's nonbasic commodity. A more reasonable interpretation seems to be that Ricardo tried to investigate a number of modifications on the 'principle' that relative prices are regulated by labour values. It is shown that Ricardo's theorems were, as first approximations, not at all bad.In his penetrating Ricardo's Economics, a General Equilibrium Theory of Distribution and Growth (1989), Prof. Morishima holds that Ricardo's conjecture about relative price-movements following changes in income distribution is not entirely valid. Prof. Morishima shows that the price of a relatively labour-intensive produced commodity can decline with respect to the price of a relatively capital-intensive produced commodity when the wage rate increases.It is, of course, well known from Sraffa (1960, pp. 14-15) and from further elucidations by Abraham-Frois and Berribi (1976, pp. 64-68) and Pasinetti (1977, pp. 82-84) that Ricardo's proposition -taken on its