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David Ricardo's LAW OF COMPARATIVE ADVANTAGE

One reason for a preference by economists for Ricardo's work introduced in 1817 might be that Ricardo presented the law of comparative costs as a justification for free trade, where Torrens used the concept as a justification for reciprocal tariffs.

Ricardo (1817) included his theory of comparative costs in On Principles of Political Economy and Taxation. With respect to international trade, Ricardo (1817) was concerned with comparative costs. The feasible point at which a state could produce a good for international trade was when its opportunity cost for a specific product was lower than the opportunity cost of a second state in relation to the same product. Of course the state had to have the capacity to produce the product for which it had a comparative advantage in sufficient quantity to satisfy the needs of the two countries. Otherwise the second state would continue to create some of the product or would arrange to acquire it from as third state. Costs were the prime point of focus for Ricardo in relation to the theory of comparative advantage.

Responses of Other Early-Day Economists Toward the Law of Comparative Advantage

Ricardo had both supporters and opponents in relation to his stance on international trade. Ricardo was concerned about maintaining the economic viability of Great Britain. His approach to assuring continued economic viability was the promotion of international trade. This stance brought him into direct conflict with the latter day mercantilists.

David Hume and Adam Smith had advanced theories that undercut the mercantilist arguments; however, the thought persisted in many quarters. Mercantilism, according to its proponents during its heyday, was a nation-building policy exercised through a series of control measures to protect a domestic economy from hostile foreign countries (Scott, 2002). A major goal of mercantilist policy was the maintenance of a positive balance of trade measurable i...

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David Ricardo's LAW OF COMPARATIVE ADVANTAGE. (1969, December 31). In LotsofEssays.com. Retrieved 00:41, November 23, 2014, from http://www.collegetermpapers.com/viewpaper/1304222084.html
 
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