“From Each According to Their Ability, to Everyone – Equally:” Free Trade Theory and the Marxist Slogan Have Much in Common

Victor Spirin

MPRA Paper from University Library of Munich, Germany

Abstract: The main models of international economics categorically assert that free trade benefits all countries, including underdeveloped ones. However, these models are based on assumptions that are totally inadequate for the technological era: the equivalence of highly skilled labor, which also utilizes the most advanced technologies, and unskilled labor, which uses primitive tools and produces Stone Age products. This paper once again examines the most fundamental of all models of international trade: Ricardo's theory of comparative advantage. An extremely instructive example of “proof” of the benefits of free trade for all participants is analyzed, based on complete disregard for the difference in highly skilled and low-skilled labor. It is shown that the universal equivalence of unit of labor is a necessary condition for the mutual benefit of free trade in Ricardo's model. If the value of a unit of labor is differentiated by the qualifications of the workforce, then trade liberalization leads to a decrease in the well-being of the country specializing in primitive types of economic activity.

Keywords: Vanek-Reinert effect; free trade; macroeconomic effects of globalization (search for similar items in EconPapers)
JEL-codes: F00 F60 F62 F63 (search for similar items in EconPapers)
Date: 2025-02-02
New Economics Papers: this item is included in nep-int
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