On the international division of labour and the invisible hand (-shake of corruption)

Alain Lipietz again:

Ricardo and the supporters of the Heckscher-Ohlin-Samuelson theorem seem, for instance, to believe that the international division of labour is the result of some world conference at which brilliant economists explained to an admiring gallery of politicians that – given relative levels of productivity, collective preferences and the initial endowment of factors – the free play of market forces would ensure the optimal division of production, and that each participant then went home convinced not only of the virtues of free trade but that the law of comparative costs ensured that the lot that had fallen to his or her country was quite justified, and that they could therefore force it to adopt the requisite specialization.

The problem with all of this is of course – now with a turn to Adam Smith – that the ‘invisible hand of the market’ is actually ‘the invisible handshake of corruption or the eminently audible boots of the military’.

Lipietz, Miracles and Mirages, pp. 16-17.

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One thought on “On the international division of labour and the invisible hand (-shake of corruption)

  1. Indeed. What the neo-Ricardians fail to appreciate is the impact of sectoral divergence: unless a miracle happens, the country whose comparative advantage lies in growing bananas is always going to lose-out economically to the country whose comparative advantage lies in building ships or computers.

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