I thank John Medaille for finally producing the source from Ricardo that   
he wants to interpret as assuming full employment  as a condition for   
beneficial free trade:  
  
"This exchange might even take place, notwithstanding that the commodity   
imported by Portugal could be produced there with less labour than in   
England. Though she could make the cloth with the labour of 90 men, she   
would import it from a country where it required the labour of 100 men   
to produce it, because it would be advantageous to her rather to employ   
her capital in the production of wine, for which she would obtain more   
cloth from England, than she could produce by diverting a portion of her   
capital from the cultivation of vines to the manufacture of cloth. "  
   
Medaille interprets the above thus: "Now clearly, the only reason the   
question comes up is because Portugal has to make a choice: She can   
employ her capital in increased wine production *or* increased cloth   
production, but not both. In other words, she is at full employment and   
must make a choice.  If there was slack in the economy, and she had   
absolute advantage in both commodities, then the question of a   
comparative advantage would not arise. It is only because resources are   
scarce that one has to make a choice, that one has to 'economize.' With   
an absolute advantage in both commodities, and the capacity to increase   
production in both, she would do so rather then seek the lesser good of   
a comparative advantage. It is only full employment that makes a choice   
necessary."   
  
But Medaille is mistaken in his interpretation on at least two counts.    
Scarcity exists even in conditions of less than full employment.  If   
that were not so, all prices would go to zero any time a country's labor   
force was not fully employed.  A positive price for any commodity is a   
clear sign of its scarcity.   
  
Secondly, whether in full employment or not, Portugal would still have   
the choice of producing either wine or cloth, having (developed) the   
capabilities in both  activities.  In Ricardo's simplified example,   
Portugal would choose to specialize in the production and exportation of   
wine because that is her comparative advantage.  
  
Furthermore, as Adam Smith explains repeatedly in the Wealth of Nations,   
opening up a country to unrestricted international trade -- without   
restraint or subsidies to domestic producers -- is one sure way to   
extend the market for its produce, increase its annual revenue, and   
increase employment opportunities for its labor force.  Thus, free trade   
may be a surer way to promote full employment in a country than trade   
restrictions.   
  
Regarding Medaille's requirement of a balance of trade as a condition   
for beneficial free trade, Smith also writes: "Nothing, however, can be   
more absurd than this whole doctrine of the balance of trade, upon   
which, not only these restraints [on imports], but almost all the other   
regulations of commerce are founded.  When two places trade with one   
another, this doctrine supposes that, if the balance be even, neither of   
them either loses or gains; but if it leans in any degree to one side,   
that one of them loses, and the other gains in proportions to its   
declension from the exact equilibrium.  Both suppositions are false.  A   
trade which is forced by means of bounties and monopolies, may be, and   
commonly is disadvantageous to the country in whose favour it is meant   
to be established ... But that trade which, without force or constraint,   
is naturally and regularly carried on between any two places, is always   
advantageous, though not always equally so, to both."  
  
To my statement that I am yet to find a classical proposition that   
depends upon the assumption of full employment for its validity,   
Medaille responds: " While I can't think of one that doesn't. Indeed,   
the employment of all resources, both capital and labor, would seem to   
be the whole purpose of all the theories, for without that, the theories   
couldn't promise very much. The idea that an economy existed to employ   
the people and their funds was basic to all theories."  Let me lists the   
following classical propositions as illustrations for him: (a) that   
interest rates are determined in the long term by the supply and demand   
for savings, rather than the supply and demand for money (currency), (b)   
from the Quantity Theory of Money -- that the price level is determined   
by the supply and demand for money (currency), not aggregate supply and   
demand for goods and services, (c) that the rate of inflation is   
determined by the rate of growth of the money (currency) supply relative   
to the rate of growth of its demand, (d) the classical forced-saving   
doctrine by which changes in the quantity of money or credit temporarily   
affect the level of real output and employment, but not in the long run,   
(e) the law of markets, which explains the adjustment of output and   
employment to changing relative prices and interest rates in an economy   
and thus explains short-term recessions, and (f) that economic growth   
(of output and employment) is determined primarily by the growth of   
savings, not consumption.  I wonder which classical theories Medaille   
has in mind.    
  
James Ahiakpor