Opportunity cost to justify comparative advantage is dumb, not Opportunity cost in general.
Edit: “Moving my banana slicing factory to Thailand and picking the bananas in Brazil to sell to Canada has a better comparative advantage than slicing the bananas while they’re in Brazil” like that
Yeah you’re right because in that case it’s not really a difference in the marginal costs that motivates the spreading out of the supply chain (on the contrary, having to transport the goods around adds a lot of overhead) but the colonialist need to keep each place from being self-sufficient.
However, you shouldn’t throw out the baby with the bath water. Marxist economists still consider comparative advantage because means of production aren’t equal in each country. From Chapter 10 of Towards a New Socialism (from 1993 so this comparison is outdated):
The German clothing industry can probably produce garments with less labor than the Chinese clothes industry. The German car industry can certainly produce cars with less labor than would be needed if they were made by backstreet workshops in Shanghai. In both cases Germany has a productivity advantage over China, but it is nonetheless economical to export Mercedes to China and to import cotton goods to Germany. This arises because of the greater relative productivity of the German car industry. Compared with hand assembly, the highly automated car factories of Mercedes may give, say, a five-fold improvement in productivity; with the rag trade the scope for improvements in productivity is not so dramatic. Although a German clothing firm might be more efficient, the advantage would not be so great as for the car industry. It thus pays Germany to concentrate its labor force in those engineering industries where it has the greatest advantage.
Of course, Cockshott goes on to develop a theory of how this structure actually works when the ratio of demand for the various commodities inevitably doesn’t match the productive capacity of both economies. The point is, though, that even if we did away with exploitation we’d still have a situation where it makes more sense to do certain kinds of production in one economy due to unequal means of production that lead to comparative advantage.
I don’t disagree that there can be a benefit, thanks for the source, but in Keynesian
economics comparative advantage is mostly used to justify colonial power over smaller nation states. Local industries are undercut for profit, once the “profitable” production is moved elsewhere(assuming they have the means) nations states are saddled with whatever was decided to be profitable for them to produce instead. It pigeon holes nation states into capitalist set industries that are mostly only advantageous for profit/productivity. What happens if the means of production is given the opportunity to equalize? At the same time, we all don’t have to produce the same thing either.
I can’t remember where I was reading this, I think in Palo Alto, but there was discussion about before colonialism many countries were known for certain things. Like India and textiles or China and pottery, Rugs in west Asia, but as countries were thrusted into global economics and with technological advancments, these profitable industries became no more, devastating economies. In it’s place, is what’s advantageous,most profitable, and productive to the ownership class.
Naturally this is already in place and we can’t go back, nor would it be advantageous to, but we shouldn’t rebuild colonialism for productivity.
Opportunity cost to justify comparative advantage is dumb, not Opportunity cost in general.
Edit: “Moving my banana slicing factory to Thailand and picking the bananas in Brazil to sell to Canada has a better comparative advantage than slicing the bananas while they’re in Brazil” like that
Yeah you’re right because in that case it’s not really a difference in the marginal costs that motivates the spreading out of the supply chain (on the contrary, having to transport the goods around adds a lot of overhead) but the colonialist need to keep each place from being self-sufficient.
However, you shouldn’t throw out the baby with the bath water. Marxist economists still consider comparative advantage because means of production aren’t equal in each country. From Chapter 10 of Towards a New Socialism (from 1993 so this comparison is outdated):
Of course, Cockshott goes on to develop a theory of how this structure actually works when the ratio of demand for the various commodities inevitably doesn’t match the productive capacity of both economies. The point is, though, that even if we did away with exploitation we’d still have a situation where it makes more sense to do certain kinds of production in one economy due to unequal means of production that lead to comparative advantage.
also obligatory Cockshott is a TERF disclaimer
I don’t disagree that there can be a benefit, thanks for the source, but in Keynesian economics comparative advantage is mostly used to justify colonial power over smaller nation states. Local industries are undercut for profit, once the “profitable” production is moved elsewhere(assuming they have the means) nations states are saddled with whatever was decided to be profitable for them to produce instead. It pigeon holes nation states into capitalist set industries that are mostly only advantageous for profit/productivity. What happens if the means of production is given the opportunity to equalize? At the same time, we all don’t have to produce the same thing either.
I can’t remember where I was reading this, I think in Palo Alto, but there was discussion about before colonialism many countries were known for certain things. Like India and textiles or China and pottery, Rugs in west Asia, but as countries were thrusted into global economics and with technological advancments, these profitable industries became no more, devastating economies. In it’s place, is what’s advantageous,most profitable, and productive to the ownership class.
Naturally this is already in place and we can’t go back, nor would it be advantageous to, but we shouldn’t rebuild colonialism for productivity.