The Discontinuous World Economy

Abstract

Broadly two views of the impact of international trade on economic relations between nations have competed for acceptance. The standard Heckscher-Ohlin- Samuelson model, building on the comparative advantage foundation of Ricar- do, suggests that freer trade will lead to gains for all countries involved and a tendency to convergence in income and living standards. This last result is asserted in its strongest form in Samuelson’s (1948,1949) factor-price equalization theorem. For two countries, two homogeneous factors, and two commodities, producible by linearly homogeneous production functions exhibiting diminishing marginal productivity, and with both countries producing some of both goods competitively without transport costs or trade restrictions, then factor prices will be equalized across both countries.

“They’re sending Armies to my side— The Americans & Russians are sending bombing planes tanks Chinese Egyptians Syrians help me battle for my righteous house my Soul’s dirt Spirit’s Nation body’s boundaries & Self’s territory my Zionist homeland my Palestine inheritance The Capitalist Communist & Third World Peoples’ Republics Dictatorships Police States Socialisms & Democracies are all sending Deadly Weapons to our aid! We shall triumph over the Enemy!” Allen Ginsberg, 1974 “Jahweh and Allah Battle”