Application of Normal Prices to Trade Analysis: National Self-Sufficiency and Factors of Competition

Abstract

The Ricardo–Sraffa trade economy model is notable for the vital role it plays in determining international normal prices as well as link commodities. It has also laid a new foundation for the study of employment conditions in trade analyses. After comparing the views of Keynes (“National Self Sufficiency” in (1982) The Collected Writings of John Maynard Keynes, vol 21, Cambridge University Press, Macmillan, 1933), Parrinello (The notion of national competitiveness in a global economy In: Vint J, Metcalfe S, Kurz H, Samuelson P, Salvadori N (eds) Economic theory and economic thought : essays in honour of Ian Steedman. Routledge, London, 2009), and Shiozawa (Evol Inst Econ Rev 3(2):141–187, 2007, A final solution of Ricardo problems on international values. Iwanami-shoten, Tokyo (in Japanese), 2014) on the market mechanisms not eliminating unemployment, this study reviewed the elements regarding the long-term competitiveness of corporations and semiautonomous bodies.

Parrinello clearly shows that a bottom line of national competitiveness is established, that is, the condition that the international profit rate must be higher than the self-sufficiency profit rate during complete specialization. However, the RSte model shows that the complete specialization point does not occur in a more general international economic environment. Moreover, when full employment is not guaranteed by trade in the country, Keynes proposed spending time and carefully ascertaining the section that should be brought up in the country.

Finally, this study viewed the RSte model as a possible theoretical basis for the national self-sufficiency concept of Keynes. In this concept, Keynes indicated that some domestic industries should be preserved from a long-term viewpoint and not merely be regarded as a short-term cost consideration.