The underlying theory behind all of the "free trade!" zombie-ism we see going on out there.
Long story short: It is more as Warren terms it "gold standard thinking" and no longer applicable under our present conditions of nations operating numismatic systems.
Developed by this Ricardo person (Luuuuuuceeeee!) in the 1800s under the metals, the scarcity thereof of those 3 metals (all found in Column 11 of the PTE and ONLY metals exhibiting full D electron bands) transferred onto the real terms of production. The theory relies on a transfer of Column 11 metal scarcity onto the real terms of production to assert that individual nations are limited in their production in real terms.
Meanwhile, the underlying real terms of production are in permanent surplus which cannot be realized under this theory from the era of our operating under the scarce Column 11 metals with the full D bands.
So the whole thing is BS as usual for today.
Adam Smith, the 18th Century Scottish economist who many see as the founding father of the subject, was in favour of it. But it was a later British writer, David Ricardo in the 19th Century, who set out the idea known as comparative advantage that underpins much of the argument for freer trade.
It is not about countries being able to produce more cheaply or efficiently than others. You can have a comparative advantage in making something even if you are less efficient than your trade partner.
When a country shifts resources to produce more of one good there is what economists call an "opportunity cost" in terms of how much less of something else you can make. You have a comparative advantage in making a product if the cost in that sense is less than it is in another country.
U6: useful background reading: Free trade / protectionism / comparative advantage https://t.co/6rLtDRmYVG— Alison Matthews (@mathenomics) January 24, 2017