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Re: Critique of Comparative Advantage Please-Suggestions
by Dr. Bruce R. McFarling
04 February 2003 22:50 UTC
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At 06:57 PM 3/02/03 -0600, Mark Douglas wrote:
...
>In a globalized world, money is the commodity par excellence 
>however he is arguing, which voids existing 19th century 
>economistic assumptions and legitimations of comparative 
>advantage that held money as some variable "within the 
>state" instead of an international nexus (as it was 
>then as it is now), leading to a whole different sense 
>of trade influences when money becomes a manipulatable 
>international variable.

This is the main point.  There is no flaw with the 
principle of comparative advantage, the flaw is with 
using the principle of comparative advantage as a 
support for globalisation:

- the principle of comparative advantage models a 
situation of completely balanced trade and no 
capital transactions across borders, and therefore 
can only be reasonably applied to a situation of 
relatively balanced trade and very few capital 
transactions across borders

- globalisation is the process of *integration* of 
world economies, and therefore, as Daly points out 
to good effect on several occasions (many of them 
collected together in _Ecological Economics and 
the Ecology of Economics: Essays in Criticism_), 
the disintegration of national economies.  Therefore 
as the process of globalisation proceeds, the 
principle of comparative advantage becomes 
increasingly *irrelevant*.

- The economics profession, of course, knows 
this: the formal rational for globalisation is 
the neoclassical model that has full employment 
built in and viability of the system assumed, 
with free markets supposedly bringing the most 
efficient allocation for whatever distribution 
of ownership happens to be in place.  The lack 
of freedom of markets in terms of market power 
of firms and in terms of barriers to trade are 
both decried ... it just so happens that the 
powers that be largely ignore the former while 
accepting the latter advice.




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