- The Japanease Society for the History of Economic Thought
- 経済学史研究 (ISSN:18803164)
- vol.60, no.1, pp.79-99, 2018 (Released:2019-09-03)
This paper presents a new interpretation of Ricardo’s international trade theory. It shows that
Ricardo’s value theory in his Principles can be understood exclusively as the cost-of-production
theory of value, which integrates the domestic value theory and international value theory,
requisitely taking into consideration changes in the value of money when it is applied to
the analysis of international exchange.
In Section II, we critically re-examine the standard interpretation of Ricardo’s trade theory
in the so-called ‘Ricardian Model’ in textbooks today. Based on the concepts of ‘comparative
advantage’ and ‘gains from trade’ within the two-country two-commodity framework, we
show that it is a distorted interpretation, which originated from J. S. Mill’s arguments and
established through the debate between Viner and Haberler, in the opposite direction of
Ricardo’s original value theory. In Section III, we present that Ricardo consistently adopted
the cost-of-production theory of value, which is valid not only for domestic, but also international,
exchange based on the concept of natural price, with the so-called ‘labour theory of
value’ being merely a subset rule in the analysis of domestic exchange. We then show that
Ricardo’s original value theory inevitably takes into consideration the differences and adjustments
in the value of money in international exchange, in the analysis of international exchange.
Finally, we will briefly review that Ricardo was heading in the right direction towards
today’s theory of international trade including intermediate goods.
JEL classification numbers: B 12, B 17.