Graham’s Critique

Abstract

During the interwar years, a prominent critic of the Ricardo-Mill- Marshall model of trade was Frank Graham, a former student of Frank Taussig.1 His complaint was over the question of dimensionality in the basic classical model - the assumption that many interesting issues about international trade could be adequately handled by means of an analysis based on two countries trading in two commodities. Graham rejected this reductionist procedure and believed that classical and neoclassical economists were led astray on substantive matters by generalising from the 2x2 case. Several of the propositions propagated by these writers as being relevant to complex trading relationships in the real world of many countries and many commodities, were in fact true only of simple bilateral trade of the England-Germany, cloth and linen variety considered by Mill. Graham called for a more realistic theory of international values incorporating many commodities and many countries; and in fact (using numerical examples) he did attempt such a generalisation, and showed how the results could be applied to a number of practical problems.2