Comments on: World Development under Monopoly Capitalism /2021/11/12/world-development-under-monopoly-capitalism/ A Critical Perspective On Development Economics Sat, 13 Nov 2021 12:54:13 +0000 hourly 1 http://wordpress.com/ By: Jorge Morales Meoqui (@MoralesMeoqui) /2021/11/12/world-development-under-monopoly-capitalism/comment-page-1/#comment-15459 Sat, 13 Nov 2021 12:54:13 +0000 http://developingeconomics.org/?p=6232#comment-15459 This article aims to criticize the prevailing narrative about the general benefits of globalization and global value chains. Unfortunately, its authors recycle one of the foundational myths of this narrative: the debunked link between the textbook theory of comparative advantage and David Ricardo’s theory of international trade.

In reality, the textbook theory of comparative advantage has nothing in common with his famous numerical example in the Principles about the exchange of English cloth and Portuguese wine. The theory gradually emerged from a fundamental misinterpretation of Ricardo made by John Stuart Mill. Thus, Mill was the starting point for all subsequent iterations of the theory of comparative advantage. He also originated the common contraposition of absolute and comparative advantage, as explained in this paper:

Moreover, Ricardo’s theory of international trade features none of the assumptions criticized in this essay, like perfect competition and international immobility of the factors of production.

Finally, it seems highly improbable that Ricardo would have considered the low wages in developing countries as their comparative advantage. After all, it was none other than Ricardo who destroyed the worn-out fallacy that wages determine the prices of commodities. Marx, an admirer and meticulous reader of Ricardo, recognized this in his Essay Value, Price and Profit (Marx, 1969, p. 15).

This essay follows a long tradition among development economists and self-proclaimed Marxists of criticizing Ricardo for popular myths about his economic theories. The critics recycle these neoclassical myths without bothering to verify whether the textbook’s claims are valid or not.

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