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There are more issues with David Ricardo's theory of trade than Miles Corak observes, but it highlights an important one. Worth a read. To summarize, Ricardo built a toy model that is useful for thinking a simplified level but it is too simplistic to useful as a model for the actual practice of political economy. Miles Corak points out that failure of trade specialists, not to mention economists that don't specialize in trade, can be traced to their being overly influenced by Ricardo's model without seeing the limitations imposed by its assumptions. Note further than conventional economics is based on assuming scarcity, opportunity costs, and marginal reasoning," and, I would add, maximization and equilibrium, as the starting points. This severely limits the scope of economy
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Mike Norman considers the following as important: conventional economics, free trace
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There are more issues with David Ricardo's theory of trade than Miles Corak observes, but it highlights an important one. Worth a read. To summarize, Ricardo built a toy model that is useful for thinking a simplified level but it is too simplistic to useful as a model for the actual practice of political economy. Miles Corak points out that failure of trade specialists, not to mention economists that don't specialize in trade, can be traced to their being overly influenced by Ricardo's model without seeing the limitations imposed by its assumptions. Note further than conventional economics is based on assuming scarcity, opportunity costs, and marginal reasoning," and, I would add, maximization and equilibrium, as the starting points. This severely limits the scope of economy
Topics:
Mike Norman considers the following as important: conventional economics, free trace
This could be interesting, too:
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There are more issues with David Ricardo's theory of trade than Miles Corak observes, but it highlights an important one. Worth a read.
To summarize, Ricardo built a toy model that is useful for thinking a simplified level but it is too simplistic to useful as a model for the actual practice of political economy.
Miles Corak points out that failure of trade specialists, not to mention economists that don't specialize in trade, can be traced to their being overly influenced by Ricardo's model without seeing the limitations imposed by its assumptions.
Note further than conventional economics is based on assuming scarcity, opportunity costs, and marginal reasoning," and, I would add, maximization and equilibrium, as the starting points. This severely limits the scope of economy theory and vitiates its use as it stands for political economy and policy formulation.
David Ricardo’s explanation of the case for free trade rests on some basic economic principles, but also has a big public policy blind spot
Miles Corak