Classical Analysis of Surplus and Profit
Economists began to concentrate attention on the surplus in the eighteenth century. Mercantilist and Physiocratic writers formulated various notions and used them in their analysis to make recommendations regarding the conduct of economic policy.1 It was not, however, until Ricardo’s work in the early nineteenth century that the conception of surplus became the cornerstone of a theory of profits. Smith (1776) most certainly laid important foundations for this development but his overall treatment of profit was muddled.2 It was left to Ricardo (1817) to disentangle those strands in Smith which could be formulated into a theory of profit based squarely on a concept of surplus.
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