Capitalist Logics: Comparative Advantage

   The utopian logic of market globalism is based on the economic concept of comparative advantage. The concept holds that different actors, or people, or countries, have different capabilities of production. Some people are better at making guns, and other people are better at raising cows. It turns out that if these people exclusively produce what they’re best at producing, and then trade with each other, they will end up with more guns and butter than if they had both been raising their own cows and building their own guns.

    This welfare-increasing effect of specialization and trade increases the more actors there are participating in an economy. This means that economic trade between countries should always benefit both countries, and that the more countries involved in international trade, the more wealthy everyone is.

    Unfortunately, comparative advantage works off of idealized assumptions that are not at work in the real world: people can’t travel freely across borders, people can’t trade freely without tariffs (taxes and subsidies). The US and EU practice more labor immobility and government intervention in tariffs than weaker countries are even allowed. This means that their markets are actually less integrated (read: globalized) than the developing nations who are forced into liberalization programs under IMF contracts or by the digital herd. The injustice at work is that they profit far more from access to “third world” markets than occurs in reverse.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s