Economics textbooks of the introductory sort usually mention the English writer, David Ricardo (1772-1823), for the concept of “comparative advantage.” This holds that foreign trade will benefit even those nations which do not enjoy an absolute advantage in the production of goods. The concept is essential for free trade ideology, a foundational belief of political globalism. But Ricardo made an important assumption: that most capital would not cross national borders. Ricardo’s work therefore does not entirely support the globalist position, a fact omitted from the textbooks examined by this writer.
To simplify the relevant chapter of On the Principles of Political Economy and Taxation, Ricardo assumed a nation such as France might have an absolute advantage in the production of various goods. Capital invested there would produce more product than elsewhere. Ricardo thought, however, that France would likely not have an equally absolute advantage in every good. For some goods, say for cloth, its advantage would be very great. Its advantage for other goods, say for wine as compared to Portugal, and for hardware as compared to England, would not be as great.
In the latter case, Ricardo showed that the total product among all nations would be greater if each focused on what it did best as compared to the rest. France in our example would produce cloth, because capital invested there would produce much more cloth than the same quantity of capital invested in other nations. Although capital invested in France would also produce more wine than in Portugal, that advantage would not be so great. Portugal, the next in line for wine production, should concentrate on wine and trade its produce for French cloth, which would be comparatively cheap given the French advantage in cloth production. Portugal would be giving up less wine for the same amount of cloth than if took resources from its own wine production and moved them into domestic cloth production. In fact, both nations would end up with more cloth and wine than if they had produced each within their own borders. The same would go for trade in French cloth for English hardware. Free trade would produce a greater national product with full employment in all participating nations.
Ricardo summarized his doctrine as follows:
“Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each. This pursuit of individual advantage is admirably connected with the universal good of the whole. By stimulating industry, by regarding ingenuity, and by using most efficaciously the peculiar powers bestowed by nature, it distributes labour most effectively and most economically: while, by increasing the general mass of productions, it diffuses general benefit, and binds together by one common tie of interest and intercourse, the universal society of nations throughout the civilized world.”
Critically, however, Ricardo assumed French, Portuguese, and English capital would tend to remain at home:
“Experience . . . shews, that the fancied or real insecurity of capital, when not under the immediate control of its owner, together with the natural disinclination which every man has to quit the country of his birth and connexions, and intrust himself with all his habits fixed, to a strange government and new laws, check the emigration of capital.”
Ricardo contrasted this situation with that existing within England, where capital moved freely. “If the profits of capital employed in Yorkshire, should exceed those of capital employed in London, capital would speedily move from London to Yorkshire, and an equality of profits would be effected.” But, Ricardo insisted, “[i]t is not so between different countries.” He then spelled out the effect of this assumption on both capital and labor:
“[I]f in consequence of the diminished rate of production in the lands of England, from the increase of capital and population, wages should rise, and profits fall, it would not follow that capital and population would necessarily move from England to Holland, or Spain, or Russia, where profits might be higher.”
Ricardo is here addressing a key feature of globalism. The globalists do not merely want international trade in goods, which Ricardo assumed. They do not merely want international movement of capital, which Ricardo did not assume. They also want international movement of labor, which Ricardo understood must accompany international movement of capital. National borders should go away, in the globalists’ opinion, so people can move as freely from England to Holland, Spain, or Russia as capital itself does.
The obvious reason for the globalists’ position is that capital needs labor. If labor does not move, then capital cannot seek its highest rate of return. And again, Ricardo foresaw the connection, along with the support such a plan might have among consumers:
“It would undoubtedly be advantageous to the capitalists of England, and to the consumers in both countries, that under such circumstances, the wine and the cloth should both be made in Portugal, and therefore that the capital and labour of England employed in making cloth, should be removed to Portugal for that purpose. In that case, the relative value of these commodities would be regulated by the same principle, as if one were the produce of Yorkshire, and the other of London.”
Ricardo did not approve such movement of capital and labor, however. He apparently wished for more than an advantage to capitalists and consumers. He did not digress on his philosophical beliefs as that other English author cited by introductory economics texts, Adam Smith (1723-1790), but after describing the reluctance of capitalists to carry their wealth across national borders, Ricardo added: “These feelings, which I should be sorry to see weakened, induce most men of property to be satisfied with a low rate of profits in their own country, rather than seek a more advantageous employment for their wealth in foreign nations.”
“These feelings, which I should be sorry to see weakened . . . .” In that respect at least, Ricardo’s work does not support the globalist agenda. He did not wish to see nations replaced by an international market of capital and labor. Ricardo might even have acceded to the teaching of Pope John Paul II, who in his encyclical Laborem Exercens, critiqued ideologies which treat humans as inputs of production, as things to be moved at will:
“In the modern period, from the beginning of the industrial age, the Christian truth about work had to oppose the various trends of materialistic and economistic thought.
“For certain supporters of such ideas, work was understood and treated as a sort of ‘merchandise’ that the worker—especially the industrial worker—sells to the employer, who at the same time is the possessor of the capital, that is to say, of all the working tools and means that make production possible. This way of looking at work was widespread especially in the first half of the nineteenth century. . . . The interaction between the worker and the tools and means of production has given rise to the development of various forms of capitalism—parallel with various forms of collectivism—into which other socioeconomic elements have entered as a consequence of new concrete circumstances, of the activity of workers’ associations and public authorities, and of the emergence of large transnational enterprises. Nevertheless, the danger of treating work as a special kind of ‘merchandise,’ or as an impersonal ‘force’ needed for production (the expression ‘workforce’ is in fact in common use) always exists, especially when the whole way of looking at the question of economics is marked by the premises of materialistic economism.
“A systematic opportunity for thinking and evaluating in this way, and in a certain sense a stimulus for doing so, is provided by the quickening process of the development of a one-sidedly materialistic civilization, which gives prime importance to the objective dimension of work, while the subjective dimension—everything in direct or indirect relationship with the subject of work—remains on a secondary level. In all cases of this sort, in every social situation of this type, there is a confusion or even a reversal of the order laid down from the beginning by the words of the Book of Genesis: man is treated as an instrument of production, whereas he—he alone, independently of the work he does—ought to be treated as the effective subject of work and its true maker and creator. Precisely this reversal of order, whatever the programme or name under which it occurs, should rightly be called ‘capitalism’—in the sense more fully explained below. Everybody knows that capitalism has a definite historical meaning as a system, an economic and social system, opposed to ‘socialism’ or ‘communism.’ But in the light of the analysis of the fundamental reality of the whole economic process—first and foremost of the production structure that work is—it should be recognized that the error of early capitalism can be repeated wherever man is in a way treated on the same level as the whole complex of the material means of production, as an instrument and not in accordance with the true dignity of his work—that is to say, where he is not treated as subject and maker, and for this very reason as the true purpose of the whole process of production.” (Art. 7).
Globalism clearly treats humans “on the same level as the whole complex of the material means of production, as an instrument and not in accordance with the true dignity of work.” But it is not just a matter of moving people as needed. For the globalists, some people are not needed at all. Ricardo was correct. Trade policy should be guided by something more than an advantage to capitalists and consumers.