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Brad DeLong — Ricardo’s Big Idea, and Its Vicissitudes
Brad DeLong shows how Ricardo's version of economic liberalism based on free trade explained by comparative advantage is bourgeois liberalism that enriches the ownership class.
What if the person in the ownership class owned a domestic producer
I believe that most firms produce for the domestic and export markets rather than export alone. If goods were only produced for the domestic market, then it would not figure into trade.
The idea is that firms only produce surplus goods over domestic use if there is comparative advantage, since the exported good won't able to compete in price with the domestic producers as an import.
The case that an imported good would replace a domestic market, then the choice is between comparative advantage, that is, shifting production from that good to another than can be exported, or erecting a tariff wall.
Also have to remember than Ricardo's theory is set in a mercantilistic environment where an important object of trade was acquiring precious metals, gold especially, next silver and then copper.
Based on this theory industrialized countries would export finished goods and other countries natural resources and agricultural products.
The British Empire was based on monopolizing manufacture of industrial goods at the core, with the core supplied by the periphery, which used the proceeds of the sale of its resource to the core for finished goods.
So in Britain, the workers produced the goods while the workers of the periphery supplied resources and food, and the ownership class lived off the economic rent.
This became the economic model of Western bourgeois liberalism aka capitalism, in which economic rent flows to the top.
Ricard's view of comparative advantage is still pretty central to the paradigm, and neoliberalism encompasses neo-imperialism and neocolonialism.
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What if the person in the ownership class owned a domestic producer?
What if the person in the ownership class owned a domestic producer
I believe that most firms produce for the domestic and export markets rather than export alone. If goods were only produced for the domestic market, then it would not figure into trade.
The idea is that firms only produce surplus goods over domestic use if there is comparative advantage, since the exported good won't able to compete in price with the domestic producers as an import.
The case that an imported good would replace a domestic market, then the choice is between comparative advantage, that is, shifting production from that good to another than can be exported, or erecting a tariff wall.
Also have to remember than Ricardo's theory is set in a mercantilistic environment where an important object of trade was acquiring precious metals, gold especially, next silver and then copper.
Based on this theory industrialized countries would export finished goods and other countries natural resources and agricultural products.
The British Empire was based on monopolizing manufacture of industrial goods at the core, with the core supplied by the periphery, which used the proceeds of the sale of its resource to the core for finished goods.
So in Britain, the workers produced the goods while the workers of the periphery supplied resources and food, and the ownership class lived off the economic rent.
This became the economic model of Western bourgeois liberalism aka capitalism, in which economic rent flows to the top.
Ricard's view of comparative advantage is still pretty central to the paradigm, and neoliberalism encompasses neo-imperialism and neocolonialism.
It wouldn't work without USD zombie nations....
It wouldn't work without USD zombie nations....
This is the reverse of mercantilism.
When gold was dropped from settlement of international trade, the dollar replaced it, since only the USD was used in the oil trade.
The rather than the core hoarding gold, the core acquired real resources and the periphery began to hoard USD.
This is quite a different set of circumstance than prevailed at the time of Ricardo.
Tom Hickey: What happens to the value of the follow when the metro dollar is replaced?
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