Historicising Ricardo’s comparative advantage theory, challenging the normative foundations of liberal International Political Economy

Matthew Watson

doi:10.1080/13563467.2016.1216535

Abstract

ABSTRACTDavid Ricardo’s theory of comparative advantage is now two centuries old, but it remains at the heart of economists’ theories of international trade. It also continues to provide the underlying economic ethic for liberal International Political Economy (IPE). Ricardo’s numerical illustration of the mutually shared gains from specialisation and trade involved complementary structures of comparative advantage being exhibited by a productively superior hypothetical ‘Portugal’ and a productively inferior hypothetical ‘England’. Yet, the historical back-story of actual eighteenth-century trading relations between the two countries reveals Portugal’s repeated struggles to meet its treaty obligations to the English in the context of the European quest for empire. Those difficulties persisted even when it harnessed its (less profitable) commercial trade to (much more profitable) slave trading practices. Ricardo’s account of the purely mathematical logic of comparative advantage writes out of economic history the centrality of both imperial wars and African slavery to the early English and Portuguese experience of ‘free’ trade. Given this historical back-story, liberal IPE thus appears to be in urgent need of new normative foundations to decouple it from these highly illiberal economic processes.

Highlights

The year 2017 marks the bicentenary of the first publication of David Ricardo’s Principles of Political Economy
Ricardo’s account of the purely mathematical logic of comparative advantage writes out of economic history the centrality of both imperial wars and African slavery to the early English and Portuguese experience of ‘free’ trade. Given this historical back-story, liberal International Political Economy (IPE) appears to be in urgent need of new normative foundations to decouple it from these highly illiberal economic processes
Ricardo clearly matters to International Political Economy (IPE), because students can open up pretty much any textbook and find him amongst the few economists identified by name as providing the subject field’s essential roots

Summary

Introduction

The year 2017 marks the bicentenary of the first publication of David Ricardo’s Principles of Political Economy. Ricardo’s account of the purely mathematical logic of comparative advantage writes out of economic history the centrality of both imperial wars and African slavery to the early English and Portuguese experience of ‘free’ trade.

Results

Conclusion