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THE DEMYSTIFICATION OF DAVID RICARDO’S FAMOUS FOUR NUMBERS

Published online by Cambridge University Press:  27 February 2023

Jorge Morales Meoqui Open the ORCID record for Jorge Morales Meoqui [Opens in a new window]
Jorge Morales Meoqui*
Affiliation:
Jorge Morales Meoqui: Independent researcher. Email: [email protected]; homepage: https://jorgemoralesmeoqui.academia.edu.
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Abstract

The paper offers the first interpretation of David Ricardo’s famous numerical example fully compatible with the primary source. It claims that the sole purpose of the four numbers was to illustrate that the relative value of commodities made in different countries is not determined by the respective quantities of labor devoted to their production. This exception results from unequal ordinary profit rates between countries because capital does not move across national borders as easily as it does within the same country. Likewise, the paper also debunks some entrenched myths about the numerical example. It shows that Ricardo did not leave the terms of trade indeterminate, that the purpose of the four numbers was not about measuring the gains from trade, and that Portugal had no productivity advantage over England. All of this contradicts the way scholars have interpreted Ricardo’s numerical example since the mid-nineteenth century.

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Article
Information
Journal of the History of Economic Thought , Volume 45 , Issue 3 , September 2023 , pp. 447 - 466
Copyright
© The Author(s), 2023. Published by Cambridge University Press on behalf of the History of Economics Society

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Footnotes

I wish to thank Jorge Morales Pedraza, Reinhard Schumacher, Terry Peach, and Ridhiman Balaji for commenting on earlier versions of this paper. A special thanks to Ricardo Crespo, Oleg Ananyin, and David Mitch for their helpful comments during one of the online sessions of the HES 2021 Annual Conference, in which the paper was presented. I also very much appreciate the valuable feedback given by Juan Acosta, Erich Pinzón-Fuchs, John Mauro Perdomo Munévar, and Andrés Sierra during the GIHPTE-YSI seminar. None of them is responsible for the remaining errors and omissions.

References

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