Comparative advantage and the labor theory of value

Jorge Morales Meoqui

MPRA Paper from University Library of Munich, Germany

Abstract: With the famous numerical example of chapter 7 of the Principles David Ricardo intended to illustrate first and foremost the new proposition that his labor theory of value does not regulate the price of international transactions when the factors of production are immobile between countries. Unfortunately, later scholars have often omitted this proposition when referring to Ricardo’s numerical example. Instead, they have highlighted only the comparative-advantage proposition, although Ricardo considered it as a corollary of the omitted proposition, and therefore inextricably linked to it. This inexplicable omission has led to an incomplete understanding of the logical construction of Ricardo’s numerical example, as well as the misinterpretation of the four numbers as unitary labor costs. With the accurate understanding of Ricardo’s numerical example and the logical relationship between the two propositions it meant to prove, it is relatively easy to refute the main objections that have been raised against the very same numerical example in the past. Moreover, it reaffirms the sustained relevance of Ricardo’s two propositions as important insights for understanding the current process of economic globalization.

Keywords: comparative advantage; labor theory of value; David Ricardo; free trade (search for similar items in EconPapers)
JEL-codes: B12 F10 (search for similar items in EconPapers)
Date: 2010-02-10
New Economics Papers: this item is included in nep-his
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Citations: View citations in EconPapers (2)

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https://mpra.ub.uni-muenchen.de/27099/1/MPRA_paper_27099.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/32328/1/MPRA_paper_32328.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/45745/1/MPRA_paper_45745.pdf revised version (application/pdf)

Related works:
Journal Article: Comparative Advantage and the Labor Theory of Value (2011)
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