[Marxism] Query:Free Trade Issue-Diversification v. Specialization

Prem K Govindaswamy govi0006 at umn.edu
Mon Mar 20 21:17:22 MST 2006


I have some questions I need to straighten out, regarding "free trade", and
arguements capitalists often put forth. I want to directly counter the
myths they use, mainly the "specialization" arguement, and also the
difference between manufactured commodities and raw, agricultural
commodities.
 
1. The "Specialization" arguement. The capitalists argue if country A
cheaply produces item I and country B cheaply produces item II, then
instead of each country producing item I and II, A should only produce I
and B only produces II. Here is what I have so far-

-Difference between raw goods and manufactured goods. There is a greater
amount of human labor put into converting unusable raw materials (cocoa
beans, rubber, etc.) into usable manufactured ones. Manufactured goods are
more usable by humans, therefore countries which have manufactured goods
acquire more wealth than countries that export raw materials.

-an economy that is dependent on one resource is subject to price
fluctuations and resulting instability

-B/c if one country has a monopoly on producing manufactured goods, the
underdeveloped ones are forced to resort to restructuring their agricultre
for tradable goods, rather than domestic food needs, leading to starvation.
If the underdeveloped countries could develop their manufacturing, they
would at least have goods of nearly equal exchange value even if those
goods are totally different from the developed countries goods (i.e. radios
vs. refined chocolate), and thus wouldn't be forced to give up domestic
food production. 

-Flooding underdeveloped countries w/ cheap foreign manufactured goods
destroys the native craft industry, leaving millions unemployed,
(ironically w/ no way of affording these goods), without the domestic
industrialization to provide any employment or means of subsistence 

2. Difference between industrial products and agricultural products.
Industrial products have much more human labor (comparatively) in them that
make them of more use for humans. Agricultural products have much less
value to them, primarily because a) in the case of rubber, cocoa, coffee
beans, etc. they aren't of use to humans in their raw form, or b) with
products such as bananas, melons, rice, etc. once the people of a the
nation importing those foods have fulfulled their need of food, they
generally have little more demand, while as incomes rise, there is more
demand for luxury goods.  

3. Need for industrialization in all countries- Each nation needs to
develop it's productive capabilities to their fullest. However some things
can't be produced in different nations. For example England can't produce
rubber, so does that mean England should not either grow or manufacture
rubber? LIkewise, Vietnam, by it's climate, doesn't grow Russian wheat,
therefore should or shouldn't Vietnam grow wheat or manufacture wheat
products. Is this correct or no?

4. Destructive effects of Modern "Free Trade Agreements". Setting aside for
now, the issue of tearing down barriers to capital flow in and out of
countries, the FTAA and other agreements demand that the underdeveloped
countries abandon all inustrialization projects, which would provide
competition for U.S. exports and cut into profits of the U.S. based firms. 

If anyone has clear, sharper more succint theories, to counter the
"Specialization arguement" as well as corrections to the existing points,
please post them. I would appreciate it greatly.   







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