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It's almost hysterically funny how wrong Ricardo's theory is; even in the example he used of Portugal and the UK. Great job destroying Portuguese industry at th

It's almost hysterically funny how wrong Ricardo's theory is; even in the example he used of Portugal and the UK. Great job destroying Portuguese industry at the behest of UK capital though. As Joan Robinson put it “but in real life Portugal was dependent on British naval support, and it was for this reason that she was obliged to accept conditions of trade which wiped out her production of textiles and inhibited industrial development so as to make her more dependent than ever”. She further notes that: “What Ricardo was really concerned about was to abolish the Corn Laws so as to lower the real cost of wage goods and raise the rate of profit... When accumulation is brought into the story, it is evident that Portugal is not going to benefit from free trade. Investment in expanding manufactures leads to technical advance, learning by doing, specialisation of industries and accelerating accumulation, while investment in wine runs up a blind alley into stagnation” “Ricardo took the example of trade between England and Portugal. He argued that England, by allowing imports of wine from Portugal, would expand the production and export of cloth to pay for it. Ricardo, of course, was thinking of the English side of the exchange but the analysis is perfectly symmetrical; it implies that Portugal will gain from specialising on wine and importing cloth. In reality, the imposition of free trade on Portugal killed off a promising textile industry and left her with a slow-growing export market for wine, while for England, exports of cotton cloth led to accumulation, mechanisation and the whole spiralling growth of industrial revolution” As I've always said, this sort of economics is linear regression in service of the ruling class rather than anything resembling science.

andrewjl 6y ago
Your example is entirely about intangibles. Industrial development and associated intellectual capital is literally a textbook example. Portugal could have chosen to subsidize industrial development in some other way or for some other sector. That they didn't do so is in no way an indictment of Ricardo's theory. Why didn't they invest in some other industry? Why was a complex historical situation reduced to a bifurcated choice between making cloth or making wine, as if there were no other alternatives? Why didn't the author you quote explore this? Is it because it's not applicable or is it because the above passage was written to justify the a priori conclusion that Ricardo's theory was harmful? Knowing the Marxian[1] bent of the quoted author I know which way I'm leaning. [1] https://en.wikipedia.org/wiki/Joan_Robinson https://en.wikipedia.org/wiki/Joan_Robinson > In 1942, Robinson's An Essay on Marxian Economics famously concentrated on Karl Marx as an economist, helping to revive the debate on this aspect of his legacy.
- scottlocklin 6y ago
  It's Retardo Ricardo's example; not mine. Why is his imbecile example greeted with gaping credulity when it is so obviously false? There is nothing intangible about the example if you live in Portugal. Nice ad hominem BTW; about right for a "Hayakan."
  - andrewjl 6y ago
    Saying the Ricardo's theory is generally sound when taking into account intangibles is not gaping credulity. You seem to mistake that for unqualified support of what he wrote. You then deployed a quote by a scholar with an obvious axe to grind, confusing the discussion still further. All to distract from a banal, unalloyed statement that trade can be positive-sum and hey maybe we should think about how to encourage more of that, with Ricardo providing excellent scaffolding to build upon. To drill into the details further, Ricardo's combined idea of trade, specialization, and economies of scale does not mean that some countries must specialize in high-tech "good" industries and others must stick to commoditized, negative-externality-filled "bad" industries. His work didn't address that distinction at all, which is its limitation. Reading that into what he wrote is zero sum thinking. Countries can develop a basket of industries to specialize in, and if they plan carefully, can strategically do so to develop a stronger economy. It doesn't require state planning and contrary to Marxian economics, doesn't require state involvement period. If everyone were to do this, the whole global economy would be better off. That this doesn't happen is due a complex confluence of social, political, and economic issues, not a capitalist conspiracy. Intangible also doesn't mean what you think it means, it's things that are invisible and hard to quantify, which is exactly what the byproducts of a booming hi-tech (cloth, at that time) sector would be. It's true that Ricardo's framework did not take that into account and it's true that negative byproducts of those decisions exist today. This is exactly what my own criticism of Ricardo's ideas is, that they're a good start but not sufficient for the contemporary world. All these facts do not excuse intellectual dishonesty in throwing out what he says wholesale. P.s. And If one wanted replace Ricardo wholesale, one would have to propose a better scaffolding that accounts for economic phenomena we see in the real world. Marxism ain't it.
    - 6y ago

andrewjl 6y ago

Your example is entirely about intangibles. Industrial development and associated intellectual capital is literally a textbook example. Portugal could have chosen to subsidize industrial development in some other way or for some other sector. That they didn't do so is in no way an indictment of Ricardo's theory. Why didn't they invest in some other industry? Why was a complex historical situation reduced to a bifurcated choice between making cloth or making wine, as if there were no other alternatives? Why didn't the author you quote explore this? Is it because it's not applicable or is it because the above passage was written to justify the a priori conclusion that Ricardo's theory was harmful? Knowing the Marxian[1] bent of the quoted author I know which way I'm leaning. [1] https://en.wikipedia.org/wiki/Joan_Robinson https://en.wikipedia.org/wiki/Joan_Robinson > In 1942, Robinson's An Essay on Marxian Economics famously concentrated on Karl Marx as an economist, helping to revive the debate on this aspect of his legacy.

scottlocklin 6y ago
It's Retardo Ricardo's example; not mine. Why is his imbecile example greeted with gaping credulity when it is so obviously false? There is nothing intangible about the example if you live in Portugal. Nice ad hominem BTW; about right for a "Hayakan."
- andrewjl 6y ago
  Saying the Ricardo's theory is generally sound when taking into account intangibles is not gaping credulity. You seem to mistake that for unqualified support of what he wrote. You then deployed a quote by a scholar with an obvious axe to grind, confusing the discussion still further. All to distract from a banal, unalloyed statement that trade can be positive-sum and hey maybe we should think about how to encourage more of that, with Ricardo providing excellent scaffolding to build upon. To drill into the details further, Ricardo's combined idea of trade, specialization, and economies of scale does not mean that some countries must specialize in high-tech "good" industries and others must stick to commoditized, negative-externality-filled "bad" industries. His work didn't address that distinction at all, which is its limitation. Reading that into what he wrote is zero sum thinking. Countries can develop a basket of industries to specialize in, and if they plan carefully, can strategically do so to develop a stronger economy. It doesn't require state planning and contrary to Marxian economics, doesn't require state involvement period. If everyone were to do this, the whole global economy would be better off. That this doesn't happen is due a complex confluence of social, political, and economic issues, not a capitalist conspiracy. Intangible also doesn't mean what you think it means, it's things that are invisible and hard to quantify, which is exactly what the byproducts of a booming hi-tech (cloth, at that time) sector would be. It's true that Ricardo's framework did not take that into account and it's true that negative byproducts of those decisions exist today. This is exactly what my own criticism of Ricardo's ideas is, that they're a good start but not sufficient for the contemporary world. All these facts do not excuse intellectual dishonesty in throwing out what he says wholesale. P.s. And If one wanted replace Ricardo wholesale, one would have to propose a better scaffolding that accounts for economic phenomena we see in the real world. Marxism ain't it.
  - 6y ago