An Assessment of Samuelson’s Ricardo-Sraffa Trade Model

Abstract

This article assesses Samuelson’s attempt to introduce Sraffa’s framework of “production of commodities by means of commodities” to the neoclassical-Ricardo trade model. We slightly modify Samuelson’s model to consider, on the one hand, more commodities than countries and, on the other hand, a positive rate of interest and full international (finance) capital mobility. In the first case, comparative advantage is unable to predict the direction of trade. In the second case, the principle does not warrant the existence of trade. In conclusion, a closer look at the neoclassical-Ricardian trade model through the lenses of Sraffa casts more doubts than certainties of the comparative advantage theory.