The law of the decreasing outputs , expressed for the first time by David Ricardo (Ricardo has in fact largely taken again and improved this law, which was actually formulated for the first time by Turgot in 1768, in these terms: “While granting (...) that, in the state of the good ordinary culture, the advances bring back 250%, it is more than probable that by increasing per degree the advances, (...) each increase would be less and less profitable. ”), share of a simple principle: one starts initially by carrying his effort where it is most profitable, and one exploits the remainder only if that appears really necessary.

This law is especially valid for companies based on agriculture and the breeding. Industrialization often reveals on the contrary, and since 1830 at least of the laws of Rendement growing with the produced quantities. An production unit B able to produce twice more articles than a unit has is always less expensive than two units A. Voir economy of scale.

This concept agrees well with the idea Malthusian according to which more the population increases, plus the available resources per capita are reduced.

Where it applies, the law of the decreasing outputs in production is, with the law of decreasing utility for the consumer as regards consumption, an essential component of the mechanism of balance known under the name of law of supply and.

When balance is not automatically assured any more because one of the two laws does not apply any more in one field or temporarily, one enters a cyclic system of economic crises.

The output of the ground is inversely proportional to the population

Written in 1817 and published in 1821, in his Principles of the political economy and the tax , David Ricardo gives the following example of the law of the decreasing outputs:

There is no revenue at the beginning when the pioneers arrive in a fertile region or the ground is abundant and that only an adequate portion is necessary to nourish the population, or besides that only an adequate portion can be cultivated with the capital available to the population. Indeed, nobody is been willing to pay for good in an abundant, not-adapted quantity and, consequently, with the provision of each and everyone which wants to use it. (…)
If the ground were in unlimited quantity and of identical quality everywhere, no tenant farming, no rent could be required for its use unless it is neither unlimited nor uniform in which case, and under the pressure of the increasing population, the grounds of lower quality or located less well start to be exploited. As the request believes, the grounds of lower quality are exploited, a revenue is immediately applied to the grounds of good quality and the value of this revenue is proportional to the differences in output of these two portions of ground.
When a ground of still lower quality is put in exploitation, a revenue is immediately applied to the grounds of the second quality and this one is also proportional to the differences in productivity of these two grounds. By consequence, the revenue of the grounds of higher quality it also will increase because it must be higher than that of the ground of intermediate quality of the amount equal to the difference in quantity of capital and work (to exploit it). With each increase in population, which constrained a country to exploit grounds of lower quality in order to increase the food production, the revenue on the fertile grounds goes croître.

Or to summarize: a farmer who settles has the choice between paying a revenue raised with the owner of a good ground or to invest capital and labor for the setting in ground culture of bad quality but still in fallow. In both cases, the cost is high and it rises as the demographic pressure increases.

See too

Internal bonds

• David Ricardo
• Alfred Marshall and the law of the outputs nonproportional

External bonds

Original version of the '' Principes of the political economy and the tax '' of Ricardo For the example on the decreasing outputs, to see §2.3 with §2.5.

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