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Complete Specialization in Classical Economics

In: Developments of International Trade Theory

Author

Listed:
  • Takashi Negishi

    (The Japan Academy)

  • Takashi Negishi

    (The University of Tokyo)

Abstract

The so-called modern interpretation of Ricardian theory of comparative advantage results in the drastic conclusion that each country (England or Portugal) specializes entirely in the production of a single commodity (cloth or wine). But Ricardo himself was merely concerned with marginal adjustments of production to the given terms of trade in his famous theory of gains from foreign trade. Ricardo has nothing to do with the complete specialization. It was J. S. Mill, however, who used the assumption of the complete specialization skillfully to determine the terms of trade uniquely in his theory of the reciprocal demand. Classical economists, including Bastable and W. T. Thornton, critically discussed many important aspects of Mill’s theory, but they did not seem to raise the objection to Mill’s assumption of entire specialization. It was Pareto, a neoclassical economist, who presented a numerical example for which the assumption is inappropriate.

Suggested Citation

  • Takashi Negishi & Takashi Negishi, 2014. "Complete Specialization in Classical Economics," Advances in Japanese Business and Economics, in: Developments of International Trade Theory, edition 2, chapter 0, pages 151-165, Springer.
    • Handle: RePEc:spr:advchp:978-4-431-54433-3_19
    DOI: 10.1007/978-4-431-54433-3_19
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