Revising Classical Economics

There are five revisions that need to be made in the body of classical economics to transform it from a source of support for the exploitation theory into a source of complete and total opposition to the exploitation theory.

The conditions of the “early and rude state of society” assumed by Adam Smith, all income is actually profit, not wages.

The second necessary revision is the recognition of the positive productive functions of businessmen and capitalists and of the fact that they are the fundamental producers of products, inasmuch as they provide the guiding and directing intelligence in production at the highest level—and of the further fact that the variation of profits and interest with the size of the capital invested in no way contradicts these incomes being attributable to the labor of businessmen and capitalists.

The third necessary revision is consistent recognition of the role of private ownership of land in raising the productivity of labor in agriculture and mining. This leads to the conclusion that private ownership of land underlies the growth of the division of labor, by making labor available for industry and commerce.

Source: Capitalism by George Reisman.