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... what advocates claim for an argument and what an argument accomplishes are often two distinct things.

It took the neoclassicals and an egregiously flawed model of human behavior to arrive at a model where there is a global optimum arrived at by the Invisible Hand. Now, of course the true believers in traditional marginalist economics do not have a vocabulary or syntax in which to discuss the egregious flaws of the utility maximizing model of human behavior, and from the basis of their trained incapacities, the HO model appears to just be an "extension" of Ricardo's model.

However, what Ricardo's model established is that it is possible for nations to trade for mutual benefit. And it does not require conditions of pure competition, perfect information, or people in fact valuing all combinations of goods and bads with continuous indifference fields in order to arrive at that conclusion.

The assumptions of the argument arriving at mutual advantage then establishes the scope for types of trade relationships where we know that is possible. For the neoclassical HO theory, that scope is some alternate reality populated by some intelligent life other than human beings. For Ricardo's theory, the scope is more interesting, since it is possible, although far from automatic, to see trade relations that lie within the scope of his argument.


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 12:23:27 PM EST
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