scholarly journals Retrospectives: On the Genius Behind David Ricardo's 1817 Formulation of Comparative Advantage

2018 ◽  
Vol 32 (4) ◽  
pp. 227-240
Author(s):  
Daniel M. Bernhofen ◽  
John C. Brown
Keyword(s):  
Political Economy ◽  
Comparative Advantage ◽  
John Stuart Mill ◽  
Gains From Trade ◽  
200Th Anniversary ◽  
Analytical Results ◽  
Ricardian Model ◽  
Logical Sense

Last year marked the 200th anniversary of Ricardo’s famous “four numbers” paragraph on comparative advantage, which is one of the oldest analytical results in economics. Following the lead of James Mill (1821), these four numbers have been interpreted as unit labor coefficients. This interpretation has provided the basis for the development of the ‘Ricardian model’ from John Stuart Mill (1852) to Eaton and Kortum (2002). However, if we accept the labor unit interpretation of these numbers, Ricardo’s exposition in his 1817 Principles of Political Economy and Taxation makes little logical sense. Building on Sraffa’s (1930) interpretation of Ricardo’s numbers as labor embodied in trade, our discussion reveals the amazing simplicity and generality of Ricardo’s comparative advantage formulation and gains-from-trade logic.

The Corn Laws and the Casuistry of Free Trade, 1813–1815

2021 ◽  
pp. 111-144
Author(s):  
Ryan Walter
Keyword(s):  
Political Economy ◽  
Free Trade ◽  
Comparative Advantage ◽  
Food Supply ◽  
Historical Context ◽  
Diminishing Returns ◽  
Corn Laws ◽  
The Stability ◽  
Conceptual Progress ◽  
Policy Question

This chapter examines the Corn Laws debate from 1813 to 1815, focusing on the contributions of Malthus, Ricardo, and Robert Torrens. This episode has traditionally been studied as a moment of conceptual progress for political economy, above all through the emergence of the concepts of diminishing returns and comparative advantage. The account here produces different results by returning the texts of Malthus, Ricardo, and Torrens to their historical context, which is shown to be one where casuistical argument was deployed to counsel Parliament on how to resolve a policy question. In particular, the issue was whether or not Parliament ought to diverge from the principle of free trade in the pursuit of other principles of statecraft, the stability and security of the food supply preeminently. Once the texts are read as instances of casuistry, Ricardo’s famed theoretical brilliance instead appears as clumsiness and detachment from the needs of Parliament.

scholarly journals Retrospectives Ricardo on Machinery

2019 ◽  
Vol 33 (2) ◽  
pp. 229-242 ◽  
Author(s):  
Samuel Hollander
Keyword(s):  
Political Economy ◽  
Working Class ◽  
Technical Change ◽  
John Stuart Mill ◽  
The Third ◽  
Turn On ◽  
Technological Unemployment ◽  
The Subject ◽  
David Ricardo

We are currently experiencing an outpouring of concern both popular and professional regarding technological unemployment. I shall be discussing an apparent about-turn on the subject by David Ricardo (1772–1823), who at different times, even in different chapters of the same book, and, indeed, even at different places in the same chapter, seemed to be on both sides of the argument as to whether technological unemployment should be a matter for concern. In a chapter entitled “On Machinery,” added to the third edition of his Principles of Political Economy (1821), which comprises volume 1 of his Collected Works (1951–73), Ricardo announced that he had become concerned about the possibility, even likelihood, of technical change detrimental to labour’s interests. However, in the very same “On Machinery” chapter, Ricardo also outlined qualifications to show that there was little need for concern. Ricardo’s opposing messages are reflected in contrasting reactions to the chapter “On Machinery.” Some readers—including Thomas Robert Malthus and J. R. McCulloch—understood it as supporting working-class opposition to machinery. Others—including John Stuart Mill and Sir John Hicks—find therein the answer to such opposition

J. S. Mill's Liberal Utilitarian Assessment of Capitalism Versus Socialism

Utilitas ◽  
1996 ◽  
Vol 8 (1) ◽  
pp. 39-71 ◽  
Author(s):  
Jonathan Riley
Keyword(s):  
Political Economy ◽  
Private Property ◽  
John Stuart Mill ◽  
Market Socialism ◽  
High Quality ◽  
Working Classes ◽  
Moral Qualities ◽  
Personal Qualities ◽  
The Government ◽  
Joint Property

John Stuart Mill argued, in his Principles of Political Economy (1848, 7th edn., 1871), that existing laws and customs of private property ought to be reformed to promote a far more egalitarian form of capitalism than hitherto observed anywhere. He went on to suggest that such an ideal capitalism might evolve spontaneously into a decentralized socialism involving a market system of competing worker co-operatives. That possibility of market socialism emerged only as the working classes gradually developed the intellectual and moral qualities required for worker co-operatives to succeed against private firms. Workers would tend to reject the hierarchical wage relation as they developed the requisite personal qualities, he believed, and capitalists, facing escalating wages for skilled labour as a result of the diminishing supply of high-quality workers for hire, would tend to lend their capital to the worker co-operatives ‘at a diminishing rate of interest, and at last, perhaps, even to exchange their capital for terminable annuities. In this or some such mode’, he speculated, ‘the existing accumulations of capital might honestly, and by a kind of spontaneous process, become in the end the joint property of all who participate in their productive employment: a transformation which, thus effected, (and assuming of course that both sexes participate equally in the rights and in the government of the association) would be the nearest approach to social justice, and the most beneficial ordering of industrial affairs for the universal good, which it is possible at present to foresee.’

scholarly journals Mill's ‘Modern’ Radicalism Re-Examined: Joseph Persky's The Political Economy of Progress

Utilitas ◽  
2019 ◽  
Vol 32 (2) ◽  
pp. 147-164 ◽  
Author(s):  
Helen McCabe
Keyword(s):  
Political Philosophy ◽  
Political Economy ◽  
Political Discourse ◽  
John Stuart Mill ◽  
The Political ◽  
Economic Relations ◽  
Specific Species

AbstractIn The Political Economy of Progress, Joseph Persky argues for seeing John Stuart Mill as a consistent ‘radical’ with much to offer modern ‘radical’ political discourse. In this article, I further this claim with consideration of Mill's political philosophy, as well as his political economy. Exploring Mill's commitment to radical reordering of the economy, as well as emphasizing his commitment to egalitarianism; his historically nuanced view of ‘the progress of justice’; and his desire for a transformation of social (and economic) relations allows us to see more clearly how Mill's radicalism was a specific species of socialism. That is, Mill's early radical enthusiasm for the ideals of ‘liberty, equality and fraternity’ is also to be seen in his later socialism. Recognizing his ‘radicalism’ as a species of socialism allows greater understanding of the depth, importance and ‘radicalism’ of Mill's desired socialist reforms.

An Empirical Assessment of the Comparative Advantage Gains from Trade: Evidence from Japan

2005 ◽  
Vol 95 (1) ◽  
pp. 208-225 ◽  
Author(s):  
Daniel M Bernhofen ◽  
John C Brown
Keyword(s):  
Comparative Advantage ◽  
Natural Experiment ◽  
Historical Data ◽  
Real Income ◽  
Upper Bounds ◽  
Trade Flows ◽  
Gains From Trade ◽  
Empirical Assessment ◽  
Real Gdp ◽  
Opening Up

We provide an empirical assessment of the comparative advantage gains from trade argument. We use Japan’s nineteenth-century opening up to world commerce as a natural experiment to answer the following counterfactual: “By how much would real income have had to increase in Japan during its final autarky years of 1851–1853 to afford the consumption bundle the economy could have obtained if it were engaged in international trade during that period?” Using detailed historical data on trade flows, autarky prices, and Japan’s real GDP, we obtain upper bounds on the gains from trade of about 8 to 9 percent of Japan’s GDP.

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