This paper argues that Ricardo's discovery of the law of comparative advantage probably occurred in October 1816. The "Ricardo effect" served as a red herring to cause scholars to possibly misread Ricardo's letters in a crucial period. The letters as well as his book tell a rather beautiful and remarkable story about Ricardo's method of discovery. The modern reconstruction of Ricardo has also led to misunderstandings of his proof. Torrens cannot receive credit for discovery of the law because his statement of comparative advantage is too incomplete for easy scientific reproducibility, and does not even contain the key assumption of international factor immobility. "There's place and means for every man alive."
William Shakespeare, All's Well That Ends WellDavid Ricardo (1772-1823) probably discovered the law of comparative advantage around the first two weeks of October 1816. The date itself is not important, but his letters at the time reveal how Ricardo's mind worked when he discovered the law.If my hypothesis is correct, the letters show his mind ranged over much of the terrain of trade theory-from factor price equalization conditions to the Ricardian model. I also conjecture that the hard part of his discovery was coming up with the key assumption of factor immobility. The logical nature of his proof is re-examined. Given the importance
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