Ricardo's Gauntlet

Vishaal Kishore

Description

A highly innovative and original critique of the mainstream economic case for international free trade.

‘Ricardo’s Gauntlet’ advances a critique of the mainstream economic case for international free trade. While the core of the case for free trade is David Ricardo’s principle of comparative advantage, the book argues that this case relies on a cluster of interconnected and mutually enforcing ‘economic fictions’ – economic theories or doctrines that pretend to be fact but which upon examination turn out to be mirages. Exposing the layers of fiction nested in the subfields of mainstream economics empties comparative advantage of its persuasiveness, bringing down the case for free trade.

Acknowledgements; 1. Introduction: Ricardo’s Gauntlet and the Case for Free Trade; 2. Exploring the Case for Free Trade: Unexpected Twists in a Simple Story; 3. The Tale of International Trade’s Invisible Hand; 4. Clockwork Production and the Origin-Myths of Specialisation; 5. ‘And They Lived Happily Ever After...’: Fictions of Being Better Off and Stories of What ‘Should’ Be; 6. Conclusion by Way of Ideologiekritik: Fiction and Rationalisation; Notes; Bibliography; Index

Sujets

• POLITICAL SCIENCE
• Public policy
• General officer
• Theory
• Economics
• General

Informations

• Publié par: Anthem Press
• Date de parution: 01 septembre 2014
• Nombre de lectures: 0
• EAN13: 9781783083015
• Langue: English

Extrait

Ricardo’s Gauntlet
Ricardo’s Gauntlet
Economic Fiction and the Flawed Case for Free Trade
Vishaal Kishore
Anthem Press An imprint of Wimbledon Publishing Company www.anthempress.com
This edition first published in UK and USA 2014 by ANTHEM PRESS 75–76 Blackfriars Road, London SE1 8HA, UK or PO Box 9779, London SW19 7ZG, UK and 244 Madison Ave #116, New York, NY 10016, USA
Copyright © 2014 Vishaal Kishore
The author asserts the moral right to be identified as the author of this work.
All rights reserved. Without limiting the rights under copyright reserved above, no part of this publication may be reproduced, stored or introduced into a retrieval system, or transmitted, in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of both the copyright owner and the above publisher of this book.
British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data A catalog record for this book has been requested.
Cover design by Sylwia Pałka. Illustrations: ottoflick/Shutterstock.com ; Jan Hyrman/Shutterstock.com ; KathyGold/Shutterstock.com .
ISBN-13: 978 1 78308 299 5 (Pbk) ISBN-10: 1 78308 299 2 (Pbk)
This title is also available as an ebook
For those who went before and shone back light to guide the way.
For my family, whether by blood or by choice.
And for the children on the other side of the gates.
CONTENTS
Acknowledgements
xi
Chapter One. Introduction: Ricardo’s Gauntlet and the Case for Free Trade
1
Ricardo’s Gauntlet: Comparative Advantage and the Case for Free Trade
2
Dilettantes and Fools: Deflecting Criticism from Comparative Advantage
4
Picking Up the Gauntlet: Fact, Fiction and Free Trade
6
Methodological Preliminaries
8
The case is a theoretical one
9
The case is one with real-world relevance
9
The case operates as a whole
10
Some Comments Concerning Motivation
11
The Structure of the Investigation
12
Chapter Two. Exploring the Case for Free Trade: Unexpected Twists in a Simple Story
17
Once upon a Time: The Textbook Story
17
Assumptions and Complications of the Model
21
Distilling the Claims
23
Economics and the Advocacy of Free Trade: Optimal Policy, Rebuttable Presumption or Something Else?
25
Chapter Three. The Tale of International Trade’s Invisible Hand
31
Invisible Hands and Mechanisms
32
Two (flawed) objections
34
Proposed Mechanisms
38
Ricardo’s mechanism
39
Modern mechanisms and the importance of exchange rates
40
Will the Exchange Rate Mechanism Balance Trade?
41
Do exchange rates adjust in the face of unbalanced trade?
41
Mainstream exchange rate determination models
42
Piercing the fiction: Back to first principles
46
Do exchange rate variations correct for trade imbalances?
51
Economic Theory’s Double Failure – Analytical and Empirical
53
The Linked Fiction: Trade Misimagined
56
Summary: The Imagined Hand
59
Chapter Four. Clockwork Production and the Origin-Myths of Specialization
61
The Determinants of Comparative Advantage: Mainstream Tales of the Origins of Specialization
63
Ricardian half-stories
63
Modern retellings: The Heckscher–Ohlin–Samuelson approach
64
Critiques of the Heckscher–Ohlin–Samuelson Approach to the Origins of Comparative Advantage
65
Analytical failures
65
The Cambridge Capital Critique
66
Back to comparative advantage
69
Empirical failures
71
Fiction, Production and Comparative Advantage Analysis
71
Production possibilities, opportunity costs and the ‘exogeneity’ of comparative advantages
72
The underlying fiction: Physical scarcity and clockwork production
74
Piercing the Fiction: An Alternative Account of the Origins of Trade Advantage
76
Factors of production
77
The production process as social, relational and political
78
Ownership
79
Use
80
Sale/transfer and allowing access
81
Other (regulatory) constraint on action
82
Beyond fiction: Production and the economy as an interdependent network of mutually coercive relations
83
The social origins of scarcity and comparative advantage
86
Two Implications of the Social Origins of Comparative Advantage
88
Comparative advantages (and the gains from trade) are malleable and constructed: troubling the optimality of market-generated outcomes
89
Comparative advantages are state sponsored: The fairy tale of ‘free’ trade itself
92
Summary: The Unwitting Architects of Trade
94
Chapter Five. ‘And They Lived Happily Ever After…’: Fictions of Being Better Off and Stories of What ‘Should’ Be
97
Back to the Textbook Story
99
Distribution and International Trade
101
Distribution between countries
102
The terms of trade and the mainstream perspective
102
Unequal exchange, exploitation and international trade
105
Normative implications
110
Distribution over time: Present versus future gains
113
Distribution within countries: Beyond the fiction of the country ‘as a whole’
115
Where Welfare Economics – and the Normative Case – Run Out: The Fiction of Being ‘Better Off ’
123
The partiality of welfare economic analysis
124
Normative and evaluative insufficiency illustrated: International specialization
131
Insufficiency exacerbated – welfare and the role of the state
135
Summary: Confidence in Blindfolds
137
Chapter Six. Conclusion by Way of Ideologiekritik : Fiction and Rationalization
139
Comparative Advantage as Ideology
140
Two levels of rationalization
140
Giving the rationalization teeth: Scarcity, sacrifice and efficiency
144
The Rationalization Is Mistaken
145
This Mistaken Rationalization Has High Stakes
147
Misapprehension of the virtue of particular arrangements, policies or practices
148
Obscuring of important aspects of these arrangements, policies or practices
148
Misunderstanding the nature of the trade-offs involved in socioeconomic arrangements
150
Limiting of our understanding of the policy resources available to address international trade: False choices and hidden alternatives
151
Economics and Expertise – From Analysis to Assertion
152
Notes
159
Bibliography
187
Index
201
ACKNOWLEDGEMENTS
No production in the order of a book such as this is individual in nature. And while in writing it I have stood upon the shoulders of giants, the very tallest among them are not to be found in the endnotes.
My first thanks must go to Prajnananandaji and Hariharanandaji, as well as Samarpananandaji, Atmavidyanandaji and John Williams, whose patient love, unerring guidance and unfathomable generosity are the wellsprings from which this work – and so much more – first bubbled forth.
I began the work that was to culminate in this book while a doctoral student at Harvard University. It was an honour to undertake my studies under the supervision of Duncan Kennedy – by almost any measure the most fertile and innovative legal mind in living memory, and the baddest boy of legal theory. Duncan’s ideas have – obviously, I hope – been a key influence in my intellectual development. And while there was much to appreciate in Duncan’s supervision, I am perhaps most grateful for the manner in which he not only tolerated, but in many ways cultivated, my already well-developed intellectual stubbornness, and fostered my sense of intellectual ambition. He has been, is, and will always remain, an inspiration.
I am also deeply indebted to the other members of my doctoral committee: Stephen Marglin, David Kennedy and Janet Halley. Professor Marglin especially will see his fingerprints throughout my work – a fact I consider to be to my benefit rather than his. I also learnt much from, and enjoyed my discussions with, Christine Desan, Roberto Unger, B. S. Chimni, Roy Kreitner, David Soskice and, as always, Dianne Otto. The late Professor Mike Taggart of the University of Auckland is responsible for reinvigorating my passion for academic work after an undergraduate experience that very nearly killed it off entirely. I wish I had had the chance to tell him so.
Even before Harvard, some of the greatest blessings I enjoyed had come in the form of mentors, especially Justice Peter Gray (formerly of the Federal Court of Australia), Michael Kingston and the late Jim Williams. Each taught me (and continue to teach me) not only how to think, but also – more importantly – how to act, and how to be. My gratitude and admiration for them know no bounds.
In the year prior to starting my doctorate, two individuals – China Miéville and Talha Syed