Social Scientist. v 27, no. 318-319 (Nov-Dec 1999) p. 1.


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Editorial Note

The proposition that free trade is beneficial for all countries is central to mainstream bourgeois economics. It is invoked in support of both the structural adjustment programmes prescribed by the Bretton Woods institutions for the Third World, and the new world trading order being ushered in through the WTO, The theoretical justification for this proposition was provided originally by David Ricardo through a celebrated example. He considered trade between England and Portugal and showed that even if one of the countries could produce both cloth and wine cheaply, i.e. had an absolute advantage in the production of both goods, nonetheless, if their relative advantage in the production of the two goods differed, then each would be better off by specialising in the production of the good for which it was better suited and exchanging it for the other good.

Ricardo never once explained why countries differed in their relative advantages. Subsequent attempts to re-establish the Ricardian proposition have invoked the concept of factor endowments to explain why countries' relative capacities might differ; but this is an absurd proposition since the relative factor endowments, which include the magnitude of capital stock, are not fixed but change through economic policy, including trade policy, so that a policy of free trade has no independent anchorage. Utsa Patnaik in her E.M.S. Namboodiripad Memorial Lecture, which we publish as the lead article in the current number of Social Scientist, provides a powerful critique of Ricardo's proposition along altogether novel lines, namely that Ricardo's example itself was fraudulent: England was incapable of producing wine while Portugal was capable of producing both wine and cloth. His theory built upon a false premise serves as an apologetic for the colonial pattern of international division of labour which once again is being sought to be imposed on the Third World today. So pathetic however is the state of our intellectual life, so steeped in a comprador ethos, that these imperialist theoretical constructs are uncritically accepted by us and figure freely in our own discussions.



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