[OPE-L:8463] Re: Re: *****SPAM***** Re: Re: Comparative advantage: Comparative exploitation

From: Alejandro Valle Baeza (avalleb@prodigy.net.mx)
Date: Fri Feb 14 2003 - 02:39:31 EST

> Quoting Alejandro Valle Baeza <avalleb@prodigy.net.mx>:
> > Jerry, perhaps this is a response  for your question:
> > "
> > Re: Comparative advantage discussion
> >   a.. Messages sorted by: [ date ][ thread ][ subject ][ author ]
> >   b.. Next message: John M. Legge: "Capital controls"
> >   c.. Previous message: =?iso-8859-1?Q?G._Sebasti=E1n_Menescaldi?=: "(no
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> >   d.. In reply to: aldo balardini: "Comparative advantage discussion"
> > Fri, 13 Nov 1998 13:23:14 -0800
> > Jim Devine (jdevine@popmail.lmu.edu)
> >
> > >Now, if we assume a different theory of money, like that found in
> > >CAPITAL or in THE GENERAL THEORY, Ricardo's outcome will be
> > >completely different. As gold flows out of England, bank reserves
> > >decline, interest rate increase, investment declines and output
> > >declines. England experiences a chronical trade account deficit.
> Why should this lead to a chronic trade deficit.
> A decline in output of domestic industry will lead to
> a decline in demand for imported raw materials which
> will tend to reduce the trade deficit.

I think you are right. However, this is Shaikh's assertion. I believe
Shaik's assertion is plausible because is a description of third world
countries trade deficits.

> > >Portugal on the other hand receives gold, which makes bank reserves
> > >increase, lowering interest rates, increasing investment and output.
> > >Portugal experiences a chronical trade account surplus and a capital
> > >account deficit as capital flows into England attracted by the higher
> > >interest rate.
> This is confused. On the one level a deficit on the current
> account is necessarily reflected on the capital account, but
> that is all this is saying. One can not deduce from this that
> the deficit will be persistent in the absence of other
> factors holding the interest rate up in the long term.

I agree again. My response is the same that previous commentary.

> > England, ironically, becomes the chronically indebted
> > >country and Portugal the chronically creditor country.
> > >A different theory of money therefore destroys the happy ending of
> > >Ricardo's model, and absolute rather than comparative advantage
> > >determines the direction of trade benefits.
> >
Shaik's critics to comparative advantages is unsatisfactory in my view.
However, there are not other Marxist critics to such theory until I know.

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