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Vent for Surplus: A Case of Mistaken Identity

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  • Bruce Elmslie
  • Norman Sedgley

Abstract

Adam Smith's theory of the gains from trade has caused a great deal of controversy among economic theorists. Throughout much of his work Smith argues that markets efficiently allocate resources. Smith's treatment of the gains from trade, however, is considered inconsistent with his system of natural liberty. This paper offers a new interpretation of the vent‐for‐surplus model. It is argued that Smith's theory of trade should be considered as an extension of his domestic theory of markets and his theory of productive and unproductive labor. Once interpreted in this light, no inconsistency is found between Smith's theory of trade and his system of natural liberty.

Suggested Citation

  • Bruce Elmslie & Norman Sedgley, 2002. "Vent for Surplus: A Case of Mistaken Identity," Southern Economic Journal, John Wiley & Sons, vol. 68(3), pages 712-720, January.
    • Handle: RePEc:wly:soecon:v:68:y:2002:i:3:p:712-720
    DOI: 10.1002/j.2325-8012.2002.tb00449.x
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    References listed on IDEAS

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    1. Charles E. Staley, 1973. "A Note on Adam Smith's Version of the Vent for Surplus Model," History of Political Economy, Duke University Press, vol. 5(2), pages 438-448, Fall.
    2. Myint, Hla, 1977. "Adam Smith's Theory of International Trade in the Perspective of Economic Development," Economica, London School of Economics and Political Science, vol. 44(175), pages 231-248, August.
    3. Bruce T. Elmslie, 1996. "The Role of Joint Products in Adam Smith's Explanation of the “Vent-for-Surplus” Doctrine," History of Political Economy, Duke University Press, vol. 28(3), pages 513-523, Fall.
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