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Ricardo’s Discovery of Comparative Advantage Revisited

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  • Christian Gehrke

    () (University of Graz)

Abstract

In an influential paper entitled “David Ricardo’s Discovery of Comparative Advantage”, which was published in HOPE (Vol. 34, 2002), Roy J. Ruffin attempted to reconstruct the circumstances of Ricardo’s discovery of the law of comparative advantage. Ruffin’s article has inspired a number of further contributions (see, e.g., Aldrich 2004, Maneschi 2004, 2008, Ruffin 2005, Morales-Meoqui 2011) on the precise nature, logical structure, and analytical significance of Ricardo’s formulation of the law of comparative advantage in international trade theory. The present paper shows that Ruffin’s reconstruction of Ricardo’s discovery of the law of comparative advantage, and in particular his interpretation of Ricardo’s letters to Malthus and James Mill of October 1816, encounters a number of serious problems. When the context of Ricardo’s statements is properly taken into account, and the premises and implications of Ruffin’s hypothesis, according to which those statements refer to international prices, are carefully scrutinized, his novel interpretation is seen to lack plausibility. Moreover, it is shown that Ruffin’s contention that modeling assumptions and analytical results of neoclassical trade theory such as “factor price equalization”, the “Lerner symmetry theorem”, or the “Stolper-Samuelson theorem” can be discerned in Ricardo’s chapter “On Foreign Trade” cannot be sustained.

Suggested Citation

  • Christian Gehrke, 2014. "Ricardo’s Discovery of Comparative Advantage Revisited," Graz Economics Papers 2014-02, University of Graz, Department of Economics.
  • Handle: RePEc:grz:wpaper:2014-02
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    References listed on IDEAS

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    1. Vivian Charles Walsh, 1979. "Ricardian Foreign Trade Theory in the Light of the Classical Revival," Eastern Economic Journal, Eastern Economic Association, vol. 5(3), pages 421-427, October.
    2. Kurz,Heinz D. & Salvadori,Neri, 1997. "Theory of Production," Cambridge Books, Cambridge University Press, number 9780521588676.
    3. Jorge Morales Meoqui, 2011. "Comparative Advantage and the Labor Theory of Value," History of Political Economy, Duke University Press, vol. 43(4), pages 743-763, Winter.
    4. Takashi Negishi, 1982. "The Labor Theory of Value in the Ricardian Theory of International Trade," History of Political Economy, Duke University Press, vol. 14(2), pages 199-210, Summer.
    5. Maneschi, Andrea, 2004. "The true meaning of David Ricardo's four magic numbers," Journal of International Economics, Elsevier, vol. 62(2), pages 433-443, March.
    6. Christian Gehrke, 2003. "The Ricardo Effect: Its Meaning and Validity," Economica, London School of Economics and Political Science, vol. 70(277), pages 143-158, February.
    7. Sergio Parrinello, 1988. "“On Foreign Trade” and the Ricardian Model of Trade," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 10(4), pages 585-601, July.
    8. Garegnani, P, 1982. "On Hollander's Interpretation of Ricardo's Early Theory of Profits," Cambridge Journal of Economics, Oxford University Press, vol. 6(1), pages 65-77, March.
    9. William O. Thweatt, 1976. "James Mill and the Early Development of Comparative Advantage," History of Political Economy, Duke University Press, vol. 8(2), pages 207-234, Summer.
    10. Roy J. Ruffin, 2002. "David Ricardo's Discovery of Comparative Advantage," History of Political Economy, Duke University Press, vol. 34(4), pages 727-748, Winter.
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