Exports and Free Trade
The theory of comparative advantage materialized during the first quarter of the 19th century in the writings of 'classical economists'. While David Ricardo is most credited with the development of the theory (in Chapter 7 of his Principles of Political Economy, 1817), James Mill and Robert Torrens produced similar ideas. The theory states that all parties maximize benefit in an environment of unrestricted trade, even if absolute advantages in production exist between the parties.
In contrast to Mercantilism, the first systematic body of thought devoted to international trade, emerged during the 17th and 18th centuries in Europe. While most views surfacing from this school of thought differed, a commonly argued key objective of trade was to promote a "favorable" balance of trade, referring to a time when the value of domestic goods exported exceeds the value of foreign goods imported. The "favorable" balance in turn created a balance of trade surplus.
Mercantilists advocated that government policy directly arrange the flow of commerce to conform to their beliefs. They sought a highly interventionist agenda, using taxes on trade to manipulate the balance of trade or commodity composition of trade in favor of the home country.
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Famous quotes containing the words free and/or trade:
“The doctrine that all men are, in any sense, or have been, at any time, free and equal, is an utterly baseless fiction.”
—Thomas Henry Huxley (1825–95)
“I look on trade and every mechanical craft as education also. But let me discriminate what is precious herein. There is in each of these works an act of invention, an intellectual step, or short series of steps taken; that act or step is the spiritual act; all the rest is mere repetition of the same a thousand times.”
—Ralph Waldo Emerson (1803–1882)