ABSTRACT

This chapter expresses that Ricardo's exposition of foreign trade, international values, and the division of the gains from trade was quite different from that attributed to him by John Stuart Mill in his essay "Of the Laws of Interchange between Nations, and the Distribution of the Gains of Commerce among the Countries of the Commercial World". The chapter focuses on the reconstruction of the historical process by which Ricardo's approach to foreign trade was transformed into the form given by J. S. Mill. It also expresses that the reformulation and further development of Ricardo's theory of foreign trade by J. S. Mill emanated very directly from the erroneous exposition of the gains from trade in the first two editions of his father's Elements. The chapter explores James Pennington's contribution, which also grew out of the erroneous explication of the division of the gains from trade in James Mill's Elements.