Ricardian theory of rent
Also called: Average rent · Topic: Colonial Economy: Land Revenue, Drain, Deindustrialisation · NCERT: Class 12, Ch 1 "Colonialism and the Countryside"
Meaning
The Ricardian theory of rent is the idea of the English economist David Ricardo. It says a landowner deserves only the "average rent", meaning the normal rent of the time. Any surplus above this should be taxed by the state. Otherwise landowners would become idle rentiers, living off income without working. In the 1820s, Company officials used this theory to argue that the state should keep a share of rising farm income. They pointed to Bengal's zamindars as proof of the danger.
Example
In the ryotwari settlement of the Bombay Deccan (from 1818), officials worked out the average income from each type of soil and fixed the state's share. Lands were resurveyed every 30 years, so the demand could be raised.
Don't confuse with
- Permanent Settlement (1793): it fixed the revenue forever, hoping that secure property would lead to investment. The Ricardian approach let the state keep taxing any surplus.
Related concepts
- David Ricardo
- Rentier
- Bombay Deccan
- Thomas Munro
- Ryotwari system
- Temporary settlement
- Mahalwari system
- Malguzar
- Deccan famine of 1832-34
- Peasant indebtedness