“David Ricardo’s insight into the price of land is nevertheless interesting: the “scarcity principle” on which he relied meant that certain prices might rise to very high level over many decades.
This could well be enough to destabilize entire societies. The price system plays a key role in coordinating the activities of millions of individuals –indeed, today, billions of individuals in the the global economy.
The problem is that the price system knows neither limits nor morality.
It would be a serious mistake to neglect the importance of the scarcity principle for understanding the global distribution of wealth in the twenty-first century.
To convince oneself of this, it is enough to replace the price of farmlands in Ricardo’s model to the price of urban real estate in major world capitals, or, alternatively, by the price of oil.
In both cases, if the trend over the period 1970-2010 is extrapolated to the period 2010-2050 or 2010-2100, the result is economic, social, and political disequilibria of considerable magnitude, not only between but within countries– desequilibria that inevitably call to mind the Ricardian apocalypse.”
—Thomas Piketti, Capital in the 21st century