Money, Credit and the Role of the State - Case Study Example

Critical review and exposition Introduction It has been argued by Dillard, (2005) that when the profits of the capital are being discussed than one of the main aspects that are taken into account are the rise and fall of the rents and the principles that can cause changes in these rents. The essay that has been outlined by Ricardo is the one that has outlined and appreciated some principles that have been laid down by Malthus. Ricardo has redefined rent of land in a different way as compared to Malthus. Ricardo adds that the rent of land is the part of land, which remains, to the owner and the rent represents the part of the whole value of the production of that land. The outgoings that are related to the production of the land have been paid and this payment includes the profits of the capital that has been employed on the land. It has been added by Ricardo that the outgoings are the ones that are estimated based on the ordinary profits rate as related to the agricultural stock at that particular time. It has been argued by Keynes (2006) that it has been added by the author that there is a situation in which there is no rent on the agricultural land and this is the situation when the usual and the ordinary rates of the profits on the agricultural stock as well as the belongings of the related to t he cultivation of land are the ones that equalize the value of the whole produce thereby this is the situation in which there is no rent on the land. This is the aspect that has been considered as an important factor and it has been said that the rent on the lands mater when the productivity of the land is higher as has been mentioned by Ricardo. In addition to this it has been added by Ricardo that if the productivity that is being reflected by the land is the same as the profits being gained than the rents are lower and there is a situation in which no rent is to be implanted. Dillard, (2005) says that an additional point that has been added by Ricardo is that the probability of an increase in the population on the land is higher. Moreover there is a slight probability that the population rate increase is higher than the increase in the capital thus the increase in the population is faster as compared to that of the capital thereby the wages as noticed might be the ones that decline. One of the main points that have to be added here in the discussion that has been added by Ricardo is that the profits that arise from the agriculture might increase as a result of the use of the newer and the better technologies on the agricultural fertile land. It has been added in this case that the land that has been cultivated for the first time, the rate of return will be the same as earlier and it can be the fifty percent or the hundred quarters of the wheat. But in this case it has been seen that the general profits are the ones that are regulated by the profits that are made on the stock and this is the profits that has been made on the least possible employment of capital on the agriculture on that particular land. If a division of the hundred quarters of the wheat is done than the forty three percent or the eight six quarters are the ones that make up the profit for the stock. In addition to this it has been seen that the remaining seven percent or the fourteen quarters are the ones that have been able to constitute the rent of the land. It has to be added here that the division that has been mentioned is the one that has to be evident in any cases as the owner of the capital has to be taken into consideration. In this case the owner of the capital is the one who owns around two hundred and ten quarters of the wheat that has been grown on the land would generate the same amount of the profit as previously. One of the important points that have been raised and emphaiosized by Ricardo include that if the owner makes a decision on employing the capital on a newer and the distant land than an additional capital is required in order to compensate and equate the two hundred and ten quarters of wheat. Thereby in this case the point that has been emphasized by Ricardo that in the progressive countries the rent of the lands are increasing with an increase in the population. In addition to this the estimation that has been made by Ricardo also adds that the rents are increasing with a certain ratio against the capital that is employed. Thereby in this way there are more profits for the property owners in the way that he not only gets more profit but also more share from the rent. Another main point that has been emphasized by Ricardo is that the rent is in all cases the portion of the profits that have been obtained from the land. If this is the fact that is kept in mind than this this is the information that can be lead to a conclusion that the rents are always a part of the profits that are created from the agricultural activities on the lands thereby the renst are not the creation of newer revenues instead they are the part of the revenues that are generated on the lands. The fall of the profits has been noticed only in the case of the stocks as the land that has been adapted to produce the foods has got no ability to be procured. In addition to this the main fact that has to be emphasized here is that the rise in the production in the product of the land is the one that can cause an increase in the rents of the lands as well. There is no doubt discussing the fact that Keynes has always emphasized on the principle of effective demand as one of the most important principles in the economic markets and this is the principle that has been regarded as one of the most important principles, in fact the most fundamental in the economic worlds. The fundamental economic principle that has been given by Keynes can be summed up and it can be explained by saying that the scale that determines the employment and the output as a whole is determined by the equilibrium that might be achieved between the demand and the supply of the output as a whole. This is the demand that can be referred to as the effective demand. The theory that has been mentioned here is known as the general theory and it can be observed that this is the theory that determines the forces and the factors that effect the balances and the equilibrium between the output and the employment in an economic world. General theory of Keynes is the one that clearly accuses and rejects the ideas that were being followed by the neo economist on the lines of the say’s laws and in this case it has been seen that the general theory is the one theory that removes all the obstacles to the full employment in that socio economic system. Quantity theory of money was the one that was accused and rejected by Keynes’s general theory and the main reason for which the theory had been rejected was the fact that the possible diverse implications between the supply and demand of all the commodities were not taken into considerations. In addition here it can be observed that the says law is the one that is being rejected. Malthus, (2001) says that the general theory that has been proposed by Keynes effectively emphasizes on the importance on looking forward and then looking backward and making an analysis on the divergence in the imbalance between the total product demand and the total product supply. Moreover, the theory increases the emphasis on the importance of the equilibrium that is created between the demand and the supply in the products. In this case the one main fact that has to be kept in mind is that the economic system is the one that is not always is in equilibrium as it has been described by Keynes by the simple changes in the flow of investments. In the case of an economic system it has been argued that there is never a state in which an equilibrium is achieved and a balanced state is achieved and in this case it has to be kept in mind that the economic system is the one that does not always move in the direction of the satisfaction of the anticipations from the economists. In addition to this it has been noticed that the Keynesian principle is the one that has been found to be much more orthodox in more than one ways as it has been seen that the theory is more towards the neo classical economics theories as compared to the other theories. It has been mentioned by Keynes that the equilibrium that has been mentioned by Keynes in his theories is the one that is short termed in more than one ways. If the theory is analyzed than the main absence and the vacuum that ca be noticed is the absence of the discussions of the money wages as wel as the prices. Thereby it can be seen that the main focus has been on the aggregation and the demand and how the levels of the aggregate and their demands are the ones that are affecting the rate of unemployment. In addition to this it has been seen that the discussions that have been carried out on the prices and the money wages are the ones that have been considered as controversial and calling on for more debates and discussions. Ricardo, (2001) says that it has been seen that since the year of 1968, that the research in the fields of the macroeconomics has been conducted keeping in mind the forecast errors and this is the research that has been carried out in relation to the forecast of the level of unemployment and in this case it ahs been seen that the forecasting of the wages and the prices are the ones that have been considered as unimportant. It has been seen that the researches that have been done on the macroeconomics are the ones that are more closely related to the theory that has been generalized by Keynes. This is the approach that makes sure that the employment is the variable that is determined by the level of the aggregate demands in the economic society and this is the approach that has been seen to be hve made no connections with the forecast errors. In this theory it has been argued by Keynes that the money wages are the ones that will be sticky as the laborers are the ones who are more concerned about the cuts in their wages. Moreover, here it has been added that if the changes in the money wages are not well synchronized than the main change that has to be anticipated is in the particular wages in the isolations. Thus the one fact that can be concluded here in this case is that is there is no synchronization done in the case of wages than the workers are the ones who show the resistance to the money wage cuts being implemented. Thereby here it can be observed that the wages and the aggregate demand is the one that has not been discussed on a rigid basis by Keynes. Conclusion The wages and the changes in the wage rate is the one that has been discussed by the economist and it has been seen that this is the main reason that the economists have been paying special attention to the factors as the aggregates and the supply of the products. The same is the issue that has been discusses by Ricardo in the rent theories and it has been observed that the higher the productivity of the land the higher is the rent . References Aréna, Richard., Graziani, Augusto., and Salvadori, Neri. (2004). Money, credit and the role of the state: essays in honour of Augusto Graziani. Alternative voices in contemporary economics. Ashgate Publishing, Ltd. Dillard, Dudley. (2005). The Economics of John Maynard Keynes: The Theory of a Monetary Economy. Kessinger Publishing. Keynes Maynard, John. (2006). The General Theory of Employment, Interest and Money. Atlantic Publishers & Distributors. Malthus, Robert, Thomas. (2001). Observations on the corn laws and a rise or fall in the price of corn on the agriculture and general wealth of the country. Electric Book Co. Ricardo, David. (2001). On the principles of political economy and taxation [electronic resource]. Electric Book Co. Read More