Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
I was going to say, wait until the "B" sample results come back before passing judgement on the morality of his actions ...

... but if its Ricardo, the answers are, yes, the argument has massive relevance, and, no, it does not exist in a world of free flows of financial wealth ... or, in other words, in a world of unfettered accumulation of financial obligations across international boundaries.

The difference between Ricardo's argument and the neoclassical revision of Ricardo's argument that the traditional marginalism now relies on is that the neoclassical revision of the argument is only very loosely anchored to reality. Not only are the core assumptions of the argument not observed in the real world ... we are still waiting for a credible case that they could be established in the real world.

Ricardo's argument is, on the other hand, far more robust.

Obviously anyone who applies the theory of comparative advantage to the policy of unfettered financial flows currently pursued by transnational corporations and their bought and paid for political henchmen is a bullshit artist. Ricardo's argument is restricted to balanced trade in finished goods between two nations capable of self-sufficiency. Thus the kind of "trade" deals being pursued under Doha, or in the US under the NAFTA-model of corporate wealth agreement, have no right to appeal to the model of comparative advantage. They are simply efforts to increase the economic leverage of transnational corporations by eliminating regulation of their exercise of economic power.

However, if Ricardo's argument is taken seriously, it provides a set of goals for the operation of the establishment of new trade institutions that could offer mutually beneficial trade, in particular between low-income and high-income nations, that is not available under current trade institutions.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Fri Jul 25th, 2008 at 12:13:24 PM EST
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