James and John Mill on Comparative Advantage: Sraffa’s Account Corrected

Abstract

Some years ago in an article entitled, “James Mill and the Early Development of Comparative Advantage” (Thweatt, 1976) I attempted to demonstrate that Ricardo’s analytic model of distribution and economic growth did not require a trade theory based on comparative costs. It was shown there that for Ricardo free trade in food was needed primarily as an offset to diminishing returns in agriculture, itself the result of continued economic expansion and a fixed supply of land. Therefore, the repeal of the Corn Laws was recommended to prevent rising costs of wage goods which, in Ricardo’s model, would only lower profits.