The Global Free Trade Error: The Infeasibility of Ricardos Comparative Advantage Theory (Routledge Frontiers of Political Economy)

Description

The doctrine of "free trade" is second only to that of "free markets" in undergirding ideological support for our current global economic structures and rules. From David Ricardo’s "comparative advantage principle" to James Meade’s Neoclassical or mainstream economics proof of self-adjusting free trade equilibrium, the free trade doctrine has had a lasting and destructive hold on Neoclassical economic thinking since its inception. The Global Free Trade Error provides a detailed analysis of these foundational models and counter-poses these to alternative Neo-Marxist "unequal exchange" models of global trade and finance. In the first part of the book the three core free trade models alluded to above are respectively demonstrated to be: overdetermined, inapplicable, and infeasible. In particular, Ricardo’s parable is shown to support managed trade rather than free trade as Ricardo and two centuries of economic texts have claimed. In the second part of the book, unequal exchange analyses of global trade are shown to provide logically coherent and useful insights into global trade and finance. In the third and final part of the book, this unequal exchange perspective is used, within a general "demand and cost" setting, to develop a set of global managed trade principles for a more equitable and sustainable world trade regime. This book will be of great interest to those who study political economy, history of economic thought, and international trade, including trade agreements and tariffs. The Global Free Trade Error- Front Cover The Global Free Trade Error Title Page Copyright Page Dedication Contents List of figures List of tables Acknowledgements Chapter 1: Introduction Note References PART I: The illogical foundations of free trade ideology Reference Chapter 2: The infeasibility of free trade in classical theory: Ricardo’s
comparative advantage parable has no solution 1 Introduction 2 A simple own-price formalization of Ricardo’s comparative advantage parable 3 A fully specified constant elasticity model of Ricardo’s parable 4 Conclusion Notes Appendix A Appendix B References Chapter 3: The limits of free trade in Neoclassical theory: from Heckscher-Ohlin to unequal exchange 1 Introduction 2 The irrelevant algebraic Heckscher-Ohlin (AHO) model 3 Meade’s geometric demonstration of a Neoclassical free trade equilibrium 4 Haberler’s opportunity cost-based graphical Heckscher-Ohlin (GHO) model 5 The GHO model does not generally apply to countries with highly dissimilar economies 6 Possible trading outcomes for countries with very unequal production factor costs 7 Possible trading outcomes for countries with very unequal production capacities 8 Conclusion Notes References Chapter 4: Globally sustainable and balanced international trade based
on exchange-rate adjustment is mathematically unstable
and therefore economically infeasible 1 Introduction 2 The simple instability argument 3 Exchange-rate-based international trading systems have, at most, one balanced-trade solution 4 A three-country free trade solution cannot include any bilateral trade balances 6 Any feasible three-country free trade solution is generally unstable 7 A balanced N-country “free trade” system is also economically infeasible 8 Conclusion Notes References PART II: The logical (and moral) foundations of unequal exchange trade theory Note References Chapter 5: Unequal exchange without a labor theory of prices: on the need for a global Marshall Plan and solidarity trading regime 1 Introduction 2 A modified Hahnel model of international trade 3 Autarky 4 Free trade 5 Policy options 6 Conclusions Notes References Chapter 6: Unequal exchange and the rentier economy 1 Introduction 2 Fictitious value-added output in U.S. GDP 3 The rentier economic model 4 Stylized characteristics of “rentier” versus “unequal exchange” advanced economies 5 A simple rentier, unequal exchange, and developing country world trade model 6 Policy conclusions Notes References PART III: Globalization that supports human and planetary well-being Chapter 7: Toward a new political economy for the U.S. 1 Introduction 2 Permanent jobs program for the U.S.: economic restructuring to meet human needs 3 Rebalancing world trade to create a sustainable U.S. and world economy 4 Industrial policy to maintain U.S. prosperity 5 Conclusion Notes References Chapter 8: There is no alternative to managed global trade 1 World trade and finance in the early twenty-first century 2 Practical near-term reforms to the current international trade and finance regime 3 The relationship between FT and the supply and demand model (SDM), and UE and the demand and cost model (DCM) 4 The supply and demand model (SDM) meme 5 The (mostly real) demand and cost model (DCM) story 6 FT and UE trade models highlight exchange vs. exploitation, analyses of globalization 7 Conclusion: long-terms goals to support a more just and sustainable global trade regime Notes References Index