1. No original and indestructible power: Ricardo is of the opinion that rent is paid due to the original and indestructible powers of the soil. It is pointed out that there are no powers of the soil which are indestructible. As we go on cultivating a piece of land time and again, its fertility gradually diminishes. To this criticism, it is replied that there are properties of the soil, such as climate situation, sunshine, humidity, soil composition, etc., which are infect original and indestructible.
2. Wrong assumption of ‘No rent Land’: Ricardo assumes the existence of no-rent land-a land which just meets the cost of cultivation. The modern economists are of the opinion that if a plot of land can be put to several uses, then it does yield rent..
3. Rent enters into price: According to Ricardo, rent does not enter into price. The modern economists are of the opinion that it does enter into price.
4. Wrong assumption of perfect competition: Ricardo is of the opinion that perfect
competitior* prevails between the landlord and the tenant, but in the actual world, it is imperfect competition which is the order of the day.
5. All lands are equally fertile: Ricardo assumes that rent arises due to difference in the fertility of the soil. But the modern economists assert that if all lands are equally fertile, even then the rent will arise. The rent can arise: (i) if the produce is not
sufficient to meet the requirements of the people, and (ii) due the operation of the law of diminishing returns.
6. Historically wrong: Carey and Roscher have criticized the orders of cultivation assumed by Ricardo. They are of the opinion that it is not necessary that A grade land will be cultivated first even if it lies far away from the city. To this it is replied by
Walker that when Ricardo uses the words ‘best land’ he means by it the land which is superior both in fertility and in situation.
7. Neglect of scarcity principle. It is pointed out by the modem economists that the
concept of rent can be easily explained with the help of the scarcity principle and so there is no need to have a separate theory of rent.
Related Economics Topics
- The Ricardian Theory Of Rent
- Theory Of Rent And Tenancy
- Rent And Price
- Natural And Human Resources