[Marxism] Forwarded from Michael Yates

Louis Proyect lnp3 at panix.com
Wed Nov 26 12:30:07 MST 2003

Nestor Gorojovsky wrote:
> And Samir Amin's excellent dialectic analysis of Ricardo's 
> "demonstration" of the convenience of "comparative advantages" breaks 
> it to smithereens. Amin uses Ricardo's own discussion to show how the 
> final conclusions are both ideological and discriminatory.
> Néstor Miguel Gorojovsky
> nestorgoro at fibertel.com.ar

Global Economy

Comparative advantage: Comparative exploitation
By Gernot Kohler

Comparative advantage is like statistics: it may show part of the truth, 
but it may also hide the truth and fool the public. The theology of 
global neo-liberalism preaches that there is abundant comparative 
advantage accruing from free trade. Yet, as the United Nations 
Conference on Trade and Development (UNCTAD) and others have criticized, 
the reality of many countries tells otherwise: they export more and 
more, but do not reap the promised benefits. To understand this, it may 
be useful to understand how one can lie with "comparative advantage".

Comparative-advantage theory makes four general claims: (1) if countries 
trade with each other, they are better off than if they have no trade 
(ie, the trade-versus-no trade argument); (2) the gains from trade are 
mutual (eg, in a two-country situation, both countries gain from 
trading); (3) gains from trade may result from "comparative advantage" - 
ie, even if one country is more efficient than the other, trade may 
still be advantageous for both; (4) because of 1, 2 and 3, it is 
generally advisable for countries (a) to trade with each other, (b) to 
specialize, and (c) to trade freely.

The validity of comparative advantage depends on the wage-price levels 
of the trading countries. If the wage-price levels are the same or 
similar, then the theorem of comparative advantage may be valid. 
However, if the wage-price levels of the trading countries are 
significantly different, then the claim of comparative advantage is not 
valid and, on the contrary, then it hides the ugly reality of unequal 
exchange (global exploitation).

full: http://www.atimes.com/atimes/Global_Economy/EA29Dj02.html


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