Reading trade in the wealth of nations

History of European Ideas

Volumn 32, Issue 1, 2006, Pages 58-79

  Tribe, Keith ^a  

^a UNIVERSITY OF SUSSEX   (United Kingdom)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 29744441065     PISSN: 01916599     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.histeuroideas.2005.05.002     Document Type: Article

References (36)

1. Mill's 'Commerce Defended' of 1808 presents a vigorous defence of the gains from trade based on specialization. James Mill. Selected Economic Writings. Ed. D. Winch (Edinburgh: Oliver and Boyd, 1966) 108ff.
2. William O. Thweatt, 'James Mill and the Early Development of Comparative Advantage'. History of Political Economy 8 (1976): 207-234
3. see Roy J. Ruffin's rebuttal of this hypothesis in his 'David Ricardo's Discovery of Comparative Advantage'. History of Political Economy 34 (2002): 736-738.
4. J.S. Mill. 'Of the Laws of Interchange Between Nations; and the Distribution of the Gains of Commerce among the Countries of the Commercial World', in his Essays on some Unsettled Questions of Political Economy, Collected Works of John Stuart Mill Vol. 4, Routledge and Kegan Paul, London 1967, 232-233. The Essays were first published in 1844.
5. Mill. 'Of the Laws of Interchange Between Nations'. 233.
6. See for a modern updating Ruffin, 'David Ricardo's Discovery'
7. See Arthur I. Bloomfield's initial survey in his 'Adam Smith and the Theory of International Trade'. Essays on Adam Smith. Eds. A.S. Skinner, T. Wilson. (London: Oxford University Press, 1975) 455.
8. There is of course an extensive literature on this. Myint has drawn attention to the close relationship between Smith's theory of international trade and his treatment of domestic economic development (H. Myint, 'Adam Smith's Theory of International Trade in the Perspective of Economic Development'. Economica n.s. 44 (1977) 231-248)
9. while more recently Smith's emphasis on economies of scale has led to a partial rehabilitation-see Bruce Elmslie, Antoinette M. James. 'The Renaissance of Adam Smith in Modern Theories of Trade'. Perspectives on the History of Economic Thought Vol. IX. Themes on Economic Discourse, Method, Money and Trade. Ed. R.F. Hébert. (Aldershot: Edward Elgar, 1993) 63-76 who emphasise (p. 67) the importance of Smith's conception of exchange and the division of labour.
10. Robert A. Blecker provides an intelligent 'rational reconstruction' that seeks to reconcile the arguments of Book III with those of Book I - see his 'The 'Unnatural and Retrograde Order': Adam Smith's Theories of Trade and Development Reconsidered'. Economica 64 (1997): 527-537.
11. Note the casualness of Marris's observation that 'The idea that, in principle, free trade can benefit everyone derives from the powerful theory of comparative advantage, first discovered nearly two centuries ago by David Ricardo. Basically, it is a theory of the gains from specialisation'. Robin Marris, 'Friday got nothing', Times Literary Supplement 30 August 2002: 24 reviewing Jagdish Bhagwati, Free Trade Today.
12. Smith's principal subsequent addition to Wealth of Nations, the new Book IV Chapter VIII 'Conclusion of the Mercantile System' in the third edition of 1786, does not modify his original position and serves chiefly to clarify the underlying argument before turning to his treatment of the Physiocrats-see below.
13. Douglas Irwin attributes the first outline of a theory of comparative advantage to Mill (1814) and Torrens (1815), although the passages he adduces do little more than rephrase what Smith had already written in Wealth of Nations Book IV, as argued below-see Against the Tide, 89-90.
14. Heckscher-Ohlin Trade Theory. Eds. H. Flam, M.J. Flanders (Cambridge, MA: MIT Press, 1991).
15. E.F. Heckscher, Mercantilism, new edition in two volumes, Routledge, London 1994; first published in Swedish in 1931, translated into German in 1934, into English in 1935, with a revised edition in 1955.
16. Symptomatic in this respect is Donald Coleman's 'Mercantilism Revisited'. Historical Journal 23 (1980): 773-791 which passes quickly from an offhand summary of Adam Smith's contribution (pp. 774-775) to a review of opinion from the later 1930s onward.
17. S.H. Hodwala, An Analysis of Adam Smith's Inquiry into the Nature and Causes of the Wealth of Nations. Books III-V, Commercial Press, Bombay 1901. An anonymous referee has commented dismissively that this source is 'obscure', which is of course precisely my point.
18. Smith himself acknowledged this: At the close of his digression on Banks of Deposit in Book IV Chapter III he notes: 'But it is now time to return from this long digression, into which I have insensibly been led in endeavouring to explain the reasons why the exchange between the countries which pay in what is called bank money⋯'. An Inquiry into the Nature and Causes of the Wealth of Nations. Eds. R.H. Campbell, A.S. Skinner, W.B. Todd. (Oxford: University Press, 1976) (henceforth = WN) IV.iii.b.17.
19. G & W. B. Whittaker, London 1821.
20. James Thornton, Oxford 1877; in 1880 Emerton brought out Part II, and in 1881 reissued the whole in one volume, primarily aimed at students in Oxford.
21. Germain Garnier, 'Préface du traducteur'. II. Une méthode pour faciliter l'étude de l'ouvrage de Smith', in his edition of Recherches sur la nature et les causes de la richesse des nations, H. Agasse, Paris An X 1802 p. xxiij.
22. Garnier, 'Préface', xxv.
23. Garnier, 'Préface', xxvj.
24. Garnier, 'Préface', xxvij-xxviij. The parts run as follows: The first deals with value; the second with the general nature of wealth; and the third with the increase and distribution of wealth.
25. The purpose of 'Prac Crit' is to direct attention to what is actually on the page, rather than associations with a received canon in the mind of the reader. Its merits are considerable when faced with generations of received opinion. Richards's first experiments in the mid-1920s quickly demonstrated that a reader, bereft of pointers such as author and date, quickly fell back on stock responses, substituted preconceptions for on the page, and, importantly, was drawn unerringly to elevate the 'one worthless piece' slipped in among the writings of eminent poets-I.A. Richards, Practical Criticism. A Study of Literary Judgement. (London: Routledge, 2001 (1929): Vii, 304.
26. Arthur Bloomfield picks up on this line of argument, but as elsewhere in his essay translates it into modern terms under the rubric 'transport costs' -'Adam Smith and the Theory of International Trade', 465-466.
27. In modern terms, a closed as opposed to an open economy.
28. Ie as a 'vent for surplus'; Smith does adhere to the idea that exported goods are a surplus over and above domestic demand, but this is not important in his explanation of the gains from trade, notwithstanding the way in which commentators have fastened onto this 'error'.
29. Chapter II 'Of Restraints upon the Importation from foreign Countries of such Goods as can be produced at Home'.
30. Note that Smith here writes that individuals 'frequently' promote the public good through unwitting action. He does not assert, as is so often assumed, that the pursuit of self-interest automatically leads to the augmentation of national wealth.
31. Ricardo deals at length with the issue of bounties in Chapter XXII of his Principles, but directs his attention entirely to their impact upon prices and the level of profit, not to the larger issue of the disposition of labour and capital-D. Ricardo. On the Principles of Political Economy and Taxation. Eds. P. Sraffa, M.H. Dobb, Works and Correspondence of David Ricardo. Vol. I (London: Cambridge University Press, 1951).
32. Ricardo, Principles, 128-133.
33. Ricardo, Principles, 133.
34. Ricardo, Principles, 133-134.
35. Ricardo, Principles, 135.
36. Ricardo, Principles, 137-138.