Posted on 03/19/2004 7:54:53 PM PST by Luis Gonzalez
I've haven't seen so much communist ideology spouted since I left Cuba.
Actually Luis, Marx and Engels were advocate's of Ricardo's economic theory.
But, in general, the protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favor of free trade.
~Karl Marx, "On the Question of Free Trade" - January 9, 1848
If there is anything clearly exposed in political economy, it is the fate attending the working classes under the reign of Free Trade. All those laws developed in the classical works on political economy, are strictly true under the supposition only, that trade be delivered from all fetters, that competition be perfectly free, not only within a single country, but upon the whole face of the earth. These laws, which A. Smith, Say, and Ricardo have developed, the laws under which wealth is produced and distributed — these laws grow more true, more exact, then cease to be mere abstractions, in the same measure in which Free Trade is carried out. And the master of the science, when treating of any economical subject, tells us every moment that all their reasonings are founded upon the supposition that all fetters, yet existing, are to be removed from trade. They are quite right in following this method....
Thus it can justly be said, that the economists — Ricardo and others — know more about society as it will be, than about society as it is. They know more about the future than about the present. If you wish to read in the book of the future, open Smith, Say, Ricardo. There you will find described, as clearly as possible, the condition which awaits the working man under the reign of perfect Free Trade. Take, for instance, the authority of Ricardo, authority than which there is no better. What is the natural normal price of the labour of, economically speaking, a working man? Ricardo replies, “Wages reduced to their minimum — their lowest level.”...
Either you must disavow the whole of political economy as it exists at present, or you must allow that under the freedom of trade the whole severity of the laws of political economy will be applied to the working classes. Is that to say that we are against Free Trade? No, we are for Free Trade, because by Free Trade all economical laws, with their most astounding contradictions, will act upon a larger scale, upon a greater extent of territory, upon the territory of the whole earth; and because from the uniting of all these contradictions into a single group, where they stand face to face, will result the struggle which will itself eventuate in the emancipation of the proletarians....
~Frederick Engels, The Free Trade Congress at Brussels, October 9, 1847
But then, I bet you already knew that, didn't you?
This sums up well where we are today and why free trade theory and comparative advantage have always been poorly thought concepts whose last bastion of relevance only lives on in Ivy Tower Land.
The models, case studies, theorems of comparative advantage, are a static, simplistic, closed-end ball of assumptions that portends to relate to a dynamic, chaotic, violent world of Nations each seeking short, intermediate and long-term strategic advantages over other nations. The notion of nations willing to abide by some sort of managed cooperative trading, and specialization of industries as William Hawkins points out is naïve and flies in the face of history.
But the truth is, even Adam Smith warns of the social unrest that would result:
Excerpted and condensed from:
Of Restraints upon the Importation from Foreign Countries
of such Goods as can be produced at Home
"There seem, however, to be two cases in which it will generally be advantageous to lay some burden upon foreign for the encouragement of domestic industry...
As there are two cases in which it will generally be advantageous to lay some burden upon foreign for the encouragement of domestic industry, so there are two others in which it may sometimes be a matter of deliberation; in the one, how far it is proper to continue the free importation of certain foreign goods; and in the other, how far, or in what manner, it may be proper to restore that free importation after it has been for some time interrupted....
- The first is, when some particular sort of industry is necessary for the defence of the country....
- The second case, in which it will generally be advantageous to lay some burden upon foreign for the encouragement of domestic industry is, when some tax is imposed at home upon the produce of the latter. In this case, it seems reasonable that an equal tax should be imposed upon the like produce of the former....
- The case in which it may sometimes be a matter of deliberation how far it is proper to continue the free importation of certain foreign goods is, when some foreign nation restrains by high duties or prohibitions the importation of some of our manufactures into their country. Revenge in this case naturally dictates retaliation, and that we should impose the like duties and prohibitions upon the importation of some or all of their manufactures into ours....
- The case in which it may sometimes be a matter of deliberation, how far, or in what manner, it is proper to restore the free importation of foreign goods, after it has been for some time interrupted, is, when particular manufactures, by means of high duties or prohibitions upon all foreign goods which can come into competition with them, have been so far extended as to employ a great multitude of hands. Humanity may in this case require that the freedom of trade should be restored only by slow gradations, and with a good deal of reserve and circumspection. Were those high duties and prohibitions taken away all at once, cheaper foreign goods of the same kind might be poured so fast into the home market as to deprive all at once many thousands of our people of their ordinary employment and means of subsistence. The disorder which this would occasion might no doubt be very considerable....
But then, why pay attention to what Adam Smith says?
Just go ahead and call me more nasty names.
That's all you ever do anyway.
There's the theory at work.
LOL! Luis, if you had ever bothered reading Ricardo's theory of comparative advantage presented in "On the Principles of Political Economy and Taxation", you'd know that he viewed labor as a mere commodity that gets driven down to the subsistance level.
Here, I'll excerpt portions of "Chapter 5 - Of Wages" to make it easy for you:
Labour, like all other things which are purchased and sold, and which may be increased or diminished in quantity, has its natural and its market price. The natural price of labour is that price which is necessary to enable the labourers, one with another, to subsist and to perpetuate their race, without either increase or diminution.It is when the market price of labour exceeds its natural price, that the condition of the labourer is flourishing and happy, that he has it in his power to command a greater proportion of the necessaries and enjoyments of life, and therefore to rear a healthy and numerous family. When, however, by the encouragement which high wages give to the increase of population, the number of labourers is increased, wages again fall to their natural price, and indeed from a re-action sometimes fall below it.
When the market price of labour is below its natural price, the condition of the labourers is most wretched: then poverty deprives them of those comforts which custom renders absolute necessaries. It is only after their privations have reduced their number, or the demand for labour has increased, that the market price of labour will rise to its natural price, and that the labourer will have the moderate comforts which the natural rate of wages will afford.
So basicly what we have is Calypso Louie Gonzalez promoting reduction of the American standard of living to the global subsistance level via massive importation of cheap goods and illegal immigration, (both of which undermine the wages and compensation of the American Middle Class).
Call me all the nasty names you want, Luis.
Might as well. It's easy enough to see that you never read the economic theory that you posted.
Yes. And unemployment is truly miserable.
On the other hand, if we subsidize our current crop of buggy-whip manufacturers to keep them in business, that's worse.
Capitalism is based, in part, on "creative destruction." If you're one of the destroyed, you won't like it, in the short run, but if you can adapt, in the long run you're better off. Regardless, you can't stop this. It is the powerful engine that makes our economic system run.
We have raised our standard of living continuously decade after decade, we've done it by NOT doing the sorts of things you promote...but you would have the world believe that in order to move forward, we need to stop doing the things that got us here, and do the things that got us the Great Depression.
Protectionism and nativism unbound gave the world communism and Nazism Willie, so it isn't surprising that you quote Marx, and count America's most renowned Hitler apologists among your heroes.
If you oppose free trade Willie, then it stands to reason that you support not free trade. Not free trade translates into government controlled trade, and by default, that means government control of industry.
Depending on subtle nuances, government control of trade and industry is either communism, or National Socialism.
Which is what you openly promote in a conservative website...you're in here spreading Union propaganda, the propaganda promoted by the same Unions that have backed John F'ing Kerry in this next election.
You're no conservative Willie, never have been, never will be.
Conservatives do not promote Karl Marx's theories, and they do not believe his lies.
Karl Marx said that free trade was destructive, and would lead the world to communism...Karl Marx's Soviet Union self destructed Willie, not that you've noticed.
I don't think his theories worked out as well as he would have hoped they would.
Do you?
There's the theory at work.
Indeed, though you seem to have misinterpreted William Hawkins. He is referring to American corporations aiding (via technology transfers) China's development efforts in building new industries like autos, aerospace, chemicals etc. where China has no advantage, comparative or otherwise. IOWs, China is using OUR technology in their nationalistic drive to build their own manufacturing & technology industries.
This is wholly outside the set of assumptions used in comparative advantage theory, where each nation meekly specializes in narrow industries and takes a passive role of collaboration in world trade for the theoretical benefit of all--Kinda like A Big Group Hug.
What Hawkins is saying is that is not how this world works. And he is correct.
It does not call for anyone to "meekly" do anything, but it does create a positive business environment as well as illustrating that one nation can achieve economic gains even if they are inferior on every level in their production capacities with other countries.
It works when the US buys computer components from India and spends its energy assembling units, rather than splitting its time between producing components and assembling computers, and vice versa with India spending mosty of its time (if not all) producing components and not assembling computers.
The US ends up with more computers because there are more components available (at a lower cost I may add), simultaneously, we also have more labor available to assemble computers since they're no longer working at manufacturing components, and India ends up with more industry via the increased demand for components.
Eventually, this symbiosis will stop working, as India's economy will rise to the point where they will seek to compete in the production of the higher profit generating finished product and in turn, they will seek cheaper manufacturing for components.
This is neither a big "Group Hug", nor "One World" economics, this is reality.
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