Ricardo's law of falling profits, and the theory of crisis he derives from it, is a theory of profits squeeze that derives, in part, from Malthus' catastrophist theory of population, and Ricardo's false theory of rent and diminishing returns. So, Ricardo says,
““Although, then, it is probable, that under the most favourable circumstances, the power of production is still greater than that of population, it will not long continue so; for the land being limited in quantity, and differing in quality, with every increased portion of capital employed on it, there will be a decreased rate of production, whilst the power of population continues always the same” (l.c., pp. 92-93).” (p 542)
To which, Marx responds,
“The latter statement is a parson’s fabrication. The power of population decreases with the power of production.” (p 542)
Marx notes that Ricardo admits that the accumulation of capital is dependent on the productive power of labour, which means that it is labour not capital that is primary. But, Marx also points out that, according to Ricardo's argument, in large settled and industrially developed countries, as opposed to the colonies, more people are engaged in agriculture. However, Marx points out that the reality is the reverse of this.
“England, for example, uses fewer agricultural labourers than any other country, new or old, although a larger section of the non-agricultural population participates indirectly in agricultural production.” (p 542)
But, even taking into consideration this indirect participation, covering things such as production of agricultural equipment, fertiliser, food packing, processing and transport, the proportion is less than in less developed countries.
“More capital is employed. More past labour, even though less living labour is used in agricultural production. But the reproduction of this capital, although its value is reproduced in the product, costs less labour because of the already existing technical basis of production.” (p 542)
And, this process has continued apace since then with only around 2% of the workforce today employed in agriculture, in Britain.
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