Port Eng
Wine 80 120
Cloth 90 100
So those are labor hours in Ricardo's example. But let's deal with
what the capitalists see, i.e. their costs.
So assuming the same labor content as above, I introduce composition
of capitals and a uniform rate of exploitation of 100%.
Port Eng
Wine 70 (60c+10v) 75 (30c+45v)
Cloth 60 (30c+30v) 80 (60c+20v)
So if the variable capital had been doubled for each entry above,
i.e., the rate of exploitation was zero, then the entries would be
identical to Ricardo's example.
But now based on comparative *costs*, specialization goes in the
opposite direction than Ricardo had hoped:
Portugal produces two units of cloth and England two units of wine!!!
While this allows capitalists to minimize their cost through
specialization, it increases the burden on labor not only above what
would have obtained in Ricardo's regime of specialization but also
above the status quo autarchy depicted in the first numerical example
above!
Ricardo's analysis assumes that labor can be fully costed but this is
impossible in a capitalist economy due to the exploitation of labor.
His analysis thus cannot say anything about how specialization and
trade will develop in a specifically capitalist economy, as Carchedi
points out.
Just as Say's Law is based on assumptions that are entirely foreign
to capitalist reality (see Homa Katouzian's excellent discussion in
Ideology and Method in Economics), Ricardo's free trade example is
based on an premise that simply could not obtain under capitalism,
viz. full labor costs can be taken into consideration and then
consciously minimized for any given quantity of output.
In a specifically capitalist economy in which the full cost of labor
is not explicitly accounted and profit seeking entrepreneurs control
production there is no reason that the socially optimal outcome of
Portuguese wine/English cloth specialization would indeed result from
the magic working of market forces.
It may be that given the force of capitalist competition there is
often selection "of" labor saving mechanisms (international trade or
automation) but capitalism renders it impossible for there to be
conscious selection "for" the labor saving trade regime or technique.
Panglossianism aside, there is the real possibility of selction of
labor increasing mechanisms.
There has been endless analysis of the other untenable assumptions in
Ricardo's analysis, e.g., constant returns, capital immobility, labor
mobility within national boundaries, no labor emigration, minimal
transition costs, etc.
But I thought I would raise this problem, though it seems that I have
convinced no one here of its importance.
Rakesh
