ASSESSING THE CONCEPT OF RENT OF SURPLUS THEORY

Abstract

 Adam Smith considered rent a surplus which arises because some produce sells for a price in excess of the cost of production. Thus rent is price-determined rather than price determining. Thomas Malthus contributed the beginnings of the differential theory of rent, endeavoring to show that rent will not arise until land of inferior quality is taken under cultivation. David‘ Ricardo fully developed the theory of rent which is named Ricardian: rent is a surplus in the form of a differential. Henry George brought the classical position to its logical conclusion: rent is an unearned increment.