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Date: | Tue Dec 5 09:12:32 2006 |
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James Ahiakpor properly says that the classical writers were well
aware that trade is between individuals even though they wrote of
trade between countries.
I'm not entirely sure that modern economic writers appreciate the
difference as they mostly discuss and certainly measure
aggregates.
The classical assumption that 'Man seeks to satisfy his desires
with the least exertion' seems to cover the various examples
given by Smith and Ricardo. People try to behave in a manner
likely to provide them with the greatest advantage. This covers
all the comparative advantage examples and, as you say, does not
require either full employment (whatever that may be) or a trade
balance.
However, I would say that all trades balance.
If I trade my book for your chair, at the moment of exchange the
value of the book is a chair. The value of the chair is a book.
There is no imbalance, How does this change if I trade 100
automobiles for a shipload of lamb chops?
The important aspect of the trade is that the traders obtain an
absolute advantage by trading. Otherwise they wouldn't trade.
In other words I rather like Medaille's "self-regulating,
self-adjusting utopia that required no intervention by the
government or any other social institution" even though he might
not.
Harry Pollard
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