ABSTRACT
The Ricardian theory of comparative advantage is one of the few classical tenets that still exist today. Ricardo’s original explanation of foreign trade is, however, quite ambiguous. In fact, several trade models have been associated with Ricardo’s name. In his articles on classical and Marxian economics, Negishi revealed one such interpretation of Ricardo’s trade theory. This reformulation was done by placing Ricardo’s original idea on trade within a genuine system of classical economics. The most important assumption that Negishi introduced in his reformulation was the incomplete international mobility of capital. In this setting, Negishi showed that Ricardo’s original results could be obtained from Negishi’s reformulated model.With his model, Negishi also showed the fallacy of the ‘disadvantage of trade’ argument contended by ‘unequal exchange’ theorists. It must be noted, however, that Negishi admitted the existence of international exploitation. This notion does not imply the inequality of trade, but does imply the inequality from incomplete factor mobility or factor immobility. However, while Negishi’s latest reinterpretation of unequal exchange and exploitation (Negishi 1999) is quite ingenuous, it does not indicate the precise condition of international exploitation. This study also aims to address this deficiency.
