The Ricardian System and the Industrial Revolution

Abstract

The goal of the paper is to study the determinants of the dynamics of the labour share (the ratio between total labour income and output) in a Ricardian economy, where factors’ compensations do not strictly follow the rule of marginal returns and the main driver of changes is technological progress and the accumulation of circulating and fixed capital. In particular, we intend to apply our Ricardian model to the explanation of the dynamics of factor shares in UK in the period between 1770 and 1860, i.e. during the Industrial Revolution. We focus on the labour share since the latter has had a deep impact on several topics, particularly as concerns the distinctive features of a capitalist economy regarding the division of gains from economic growth among the various social classes