Pksimon2007
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- May 2, 2015
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- #21
- Oh, I should have clarified this for you.
David Ricardo was an early English economist, who responded in many ways to Adam Smith, and with Smith, wrote the foundations of all modern economics.
He had a theory of comparative advantage, which argued essentially that it was always mutually beneficial for nations to trade. This was an attack on mercantilism. But he did admit that there were some exceptions which have been forgotten.
What does that have to do with money economies? Trade is always accomplished with exchanges using money.
- I'm asking the question. Do you have any ideas as to the answer?
Your question is idiotic because it assumes trade occurs without using money. Virtually all trade involves and exchange of money.
On the contrary.
Classical theory assumed that money was a nominal "veil" over trade which had no real effects (mainstream economics still assumes this today, and is taught this way).
ROFL! Really? Can you quote some classical economist saying such a thing?
I am asking, if you drop that assumption and allow that money may have real effects, does the doctrine of comparative advantage still make sense?
It is not a left-right question, so none of your usual bumper stickers will serve to answer it.
I don't know how it makes any sense whatsoever if you don't take prices into consideration. How would you determine you are better off if not for the prices of the goods in question? If Honduras can produce bananas for $0.05/lb, we are crazy to attempt growing them here in greenhouses for $5.00/lb, don't you think? If you don't know the price of bananas, then how do you know you're better off buying them from Honduras?
- Can I quote a classical economist saying that? Sure, but I'm. On my phone at the moment. Are you serious that you didn't know this?
Maybe your need for education warrants some classes or something.
Prices are nominal.
I think I see the problem.
When we speak of nominal effects, we mean that real wealth is translated into money through an exchange rate. That's nominal.
That doesn't have any real effect, which would be something like changing people's decisions about production, the distribution of wealth, and so on.