Re: Comparative Advantage: Comparative Exploitation

[Kazuhiro Kurose <kurose@xxxxxxxxxxxxxxxxxxxxxx>]

Dear Gernot

Your article is very interesting to me, and I deeply agree with you. But I
think that your argument, seen from the different viewpoint, relates to
that on numeraire. So-called "the principle of comparative advantage" is
satisfied only in a case that both economies have two goods and either good
is adopted as a numeraire. If they have two tradable goods but they adopt
another good (for example gold) as a numeraire -or three goods model-, the
principle of comparative advanyage isn't always satisfied. The wage-price
level in your article corresponds to "gold"in my argument. So I also think
that the comparative advantage isn't so universal principle than it
generally believed. These deficiency of the principle of comparative
advantage is attributed to the lack of theory of terms of trade in
Ricardo's the Principles. In this sense, it is quite appropriate that J.S.
Mill proposed a theory of reciprocal demand to determine terms of trade.