ABSTRACT
From the time of their first publication, Pareto’s pages on comparative costs were the most severely criticized of his Manuale (1906, pp. 466-474). The publication of the French translation of the book (Manuel, 1909), where the pages in question remained unaltered, sparked further criticism, so much so that, in 1943, A. Gambino felt justified in entitling one of his essays ‘Unfortunate criticism of Ricardo by Pareto’. Since then, further criticism has followed suit. In paragraphs 1-2, I will clear Pareto of such criticism, which I will further address in paragraph 4. I will rely on the following terminological conventions, also basing my arguments on a postulate and a statement of facts. I will call:
1 Ricardo’s conditions: the hypothesis that there exist two countries, and , which, with closed markets, produce both commodities A and commodities B; one of these two countries is more efficient in the production of both commodities;
2 Ricardo’s paradox: given Ricardo’s conditions in 1, the two countries would profit from the opening of their markets and complete bilateral specialization ( produces only one commodity, only the other one);
3 Ricardo’s case: once complete specialization has been achieved, world production of both commodity A and B is greater than production in conditions of closed markets;
4 Bastable’s case: once the complete specialization has been accomplished, the world production of a single commodity increases while the world production of the other commodity decreases;
5 T terms: the international terms of trade with which commodities distribution is associated when the markets are open, i.e. advantages and disadvantages deriving from the opening of the markets;
6 Rationality postulate: given the tastes of and , the potential opening of the markets actually occurs if the T terms (and the corresponding international distribution of commodities) do not affect their well-being; In section 4, mention will be made of the following:
7 Statement of facts: in his Cours, Pareto used the term Ricardo’s theorem for the hypothesis that a country is more efficient in producing both commodities, but in both countries there is nonetheless an advantage for the exchange trade in either case, that is to say, (a) in case of complete specialization and (b) in case of partial specialization.
