Adam Smith's “Two Distinct Benefits†from Trade: The Dead End of “Vent-for-Surplus†Interpretations

Reinhard Schumacher

History of Political Economy, 2015, vol. 47, issue 4, 577-603

Abstract: Hla Myint interpreted Adam Smith's “two distinct benefits†from foreign trade as a vent-for-surplus gain and a productivity gain. This classification has been adopted widely, but the vent-for-surplus gain has caused some debates. In this article, I show that Myint's categorization is based on a misinterpretation. Smith's two distinct benefits consist of exports and imports. Additionally, Smith does not expound a vent-for-surplus theory. Besides Smith's true benefits from trade, I discuss reasons for their modern misinterpretation and David Ricardo's and John Stuart Mill's criticism of Smith's theory, which is often misunderstood as well.

Keywords: international trade; Adam Smith; Hla Myint; vent-for-surplus (search for similar items in EconPapers)
Date: 2015
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