From Politics to Technocracy—and Back Again: The Fate of the Multilateral Trading Regime

2002 ◽  
Vol 96 (1) ◽  
pp. 94-117 ◽  
Author(s):  
Robert Howse

As is known to every student of trade law and policy, the modern idea of free trade originates from the theories of absolute and comparative advantage developed by the classical political economists, Adam Smith and David Ricardo. Smith and Ricardo both addressed themselves to a sovereign unilaterally deciding its trade policy. They concluded that, with some qualifications or exceptions, a policy of liberalizing restrictions on imports would maximize the wealth of that sovereign.

2000 ◽  
Vol 22 (1) ◽  
pp. 43-48 ◽  
Author(s):  
James M. Buchanan ◽  
Yong J. Yoon

Despite its recent re-emergence to analytical importance, the phenomenon of increasing returns remains outside the central core of neoclassical economics. The history of this idea (or set of ideas) might have been quite different if Adam Smith's explanation of the origins of trade had not been replaced by that of David Ricardo. To Adam Smith, mutually beneficial exchange emerges because of specialization, which, in its turn, implies the presence of increasing returns to the size of the exchange nexus. Even in a world of equals, trade offers mutuality of gain. There is no need for participants in the economic nexus to differ one from another. In the Ricardian logic, by contrast, trade presumably emerges because productive resources differ in their capacities to create economic value, at least among separate “goods.” Specialization is a “natural” feature of resource endowments—a feature that is exploited by trade. Comparative advantage ensures the mutuality of gain. But, in this explanation, there is no direct linkage between the size of the exchange network and the degree of specialization that is viable. There is no need to introduce increasing returns. Comparative advantage may be present even if there are constant returns to scale, both for the economy and for its separate productive sectors.


2021 ◽  
pp. 133-154
Author(s):  
James Stafford

This chapter offers a fresh examination of the transformation of British trade policy in the later 18th and early 19th centuries. It reconsiders the 'rise of free trade' as a mutation, rather than a rejection, of an earlier 'mercantilist' logic of national power competition. Examining the writings of the Anglo-Dutch merchant Matthew Decker alongside those of the better-known Scottish philosopher Adam Smith, this chapter identifies a switch from a competition over trade balances in precious metals, to an all-pervasive struggle for labor discipline and productivity, applying not just to princes and rulers but entire 'nations'. The reduction of tariffs and the abolition of monopolies emerges as a means of enhancing the productive power of the nation, and its related capacity for funding military conflict.


Author(s):  
Douglas A. Irwin

This chapter examines the economic logic of free trade and recent empirical evidence reinforcing the case for it. It mentions Adam Smith and David Ricardo who have described the gains from trade in a systematic way many centuries that made economists of today urge for higher income that results from improved resource allocation as the main advantage of trade. It also explains how trade not only helps to improve the allocation of existing resources but also makes those resources more productive. The chapter talks about the productivity gains from trade that are sometimes neglected but appear to be substantial. It also points out the importance of welfare benefits of a greater variety of products that resulted from trade.


2020 ◽  
Author(s):  
Jorge Morales Meoqui

David Ricardo indicated in his famous numerical example in the Principles that it would be advantageous to Portugal to import English cloth made by 100 men, although it could have been produced locally with the labor of only 90 Portuguese men. As the production of the cloth required less quantity of labor in Portugal, it has been commonly inferred that this country had a production cost advantage over England in cloth making. This inference will be proven wrong here by showing that the English cloth had a lower cost of production than the Portuguese cloth. This finding refutes the widespread belief that Ricardo had formulated a new law, principle or rule for international specialization, known as comparative advantage. He used the same rule for specialization as Adam Smith in the Wealth of Nations. Thus, the popular contraposition of Smith’s absolute versus Ricardo’s comparative cost advantage has to be dismissed.


Author(s):  
Jorge Morales Meoqui

David Ricardo indicated in his famous numerical example in the Principles that it would be advantageous to Portugal to import English cloth made by 100 men, although it could have been produced locally with the labor of only 90 Portuguese men. As the production of the cloth required less quantity of labor in Portugal, it has been commonly inferred that this country had a production cost advantage over England in cloth making. This inference will be proven wrong here by showing that the English cloth had a lower cost of production than the Portuguese cloth. This finding refutes the widespread belief that Ricardo had formulated a new law, principle, or rule for international specialization, known as “comparative advantage.” He used the same rule for specialization as Adam Smith in the Wealth of Nations. Thus, the popular contraposition of Smith’s absolute versus Ricardo’s comparative cost advantage has to be dismissed.


1985 ◽  
Vol 24 (1) ◽  
pp. 39-50
Author(s):  
Gunnar Flфystad

This paper analyses whether the developing countries are pursuing an optimal foreign trade policy, given the theoretical and empirical evidence we have. The paper concludes that constraints in imposing other taxes than tariffs in many developing countries may justify having tariffs as part of an optimal taxation policy.


2009 ◽  
Vol 2 (1) ◽  
pp. 1-33 ◽  
Author(s):  
Richard Peet

Powerful ideas that shape the world become taken-for-granted verities, in two senses of the term: as the only world that is known; and as the only world that can be imagined. When hegemony controls the imagination, fundamental criticism becomes difficult, and perhaps, impossible. Yet what if there were flaws in the original idea, from which new worlds were constructed, that have materialized in a political-economic geography beset with seemingly unsolvable problems? For example, what if there have always been fundamental flaws in the free trade, open market, competitive, global system that dominates both the world as we know it and the conventional political-economic-geographical thought we know it through? This article speculates that a psycho-discursive act of deconstruction might unravel the entire, subsequent discourse. It aims deconstruction at a founding statement in the free trade, global ideal, by looking critically at David Ricardo's theory of comparative advantage. Ricardo's argument that specialization and free trade are universally beneficial, became a founding premise of conventional economic theory and a basic prescription of liberal and neoliberal development policy. The article looks critically: at the logical consistency and representational accuracy of Ricardo's theory, especially the claim that all participants benefit from participation in a free trading scheme, so that trade brings about a far better world. The article reaches two main, critical conclusions: free trade theory based in comparative advantage has, from the beginning, been an ideology for creating economic spaces open to domination by powerful, leading countries; economics and economic geography have, since their classical beginnings, been biased in that their founding statements reverse the reality they pretend accurately to represent.


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