tailieunhanh - History of Economic Analysis part 63

History of Economic Analysis part 63. At the time of his death in 1950, Joseph Schumpeter-one of the major figures in economics during the first half of the 20th century-was working on his monumental History of Economic Analysis. A complete history of humankind's theoretical efforts to understand economic phenomena from ancient Greece to the present, this book is an important contribution to the history of ideas as well as to economics. | History of economic analysis 582 the monetary department the general theory of the rates of foreign exchange does not supplement the proposition that under international gold monometallism exchange rates fall within the gold points and are in this sense determined by them but ousts it from the key position it used to hold. Just as a general theory has reduced the gold-point theorem to the status of one of many propositions about a special case so the theory of reciprocal demand has reduced the comparative-cost principle to the status of a proposition about a particular aspect of trade under commercial competition that indeed retains some importance because it is particularly useful in destroying a prevalent error but is no longer fundamental to the theory of international Thus the two are not complements of one another any more than they are alternative theories of international values but their relation is that of a particular theorem and a comprehensive theory. Now for the relation of comparative cost and reciprocal demand to the general value theories of their authors. As regards Ricardo we may look upon the comparative-cost principle as an exception from the labor-quantity law for it describes a case where commodities no longer exchange according to this law. This exception is the more serious because it covers not only international values but also in all cases of less than perfect mobility of labor domestic values. In fact together with all the other exceptions and qualifications that Ricardo was forced to make it really rips up the entire fabric of Ricardo s theory of value. But we can also with almost equal justification interpret the comparative-cost principle as an outgrowth of the labor-quantity theory from the standpoint of which the problem of international value did present itself to Ricardo and which does supply the technique of his argument. Accordingly it has been held by high authorities Ohlin Mason that Ricardo s analysis of .