Adam Smith and the “rich country–poor country” debate: eighteenth-century views on economic progress and international trade

Do not take peace for granted: Adam Smith’s warning on the relation between commerce and war

“…Others might lose, especially land owners: "This is indeed at the expence of the landlords and better sort of people, who are generaly ruined on such occasions" (LJB 349).25 On Smith's theory of economic progress and the varied development of different countries, seeSchumacher (2016).…”

ALTERING THE PATTERN OF TRADE IN THEWEALTH OF NATIONS: ADAM SMITH AND THE HISTORIOGRAPHY OF INTERNATIONAL TRADE THEORY

“…One reason is that Smith, unlike them, did not understand international trade foremost in terms of a territorial division of labor. In contrast to classical economists, neoclassical economists valued Smith's trade theory higher, integrating it into a neoclassical Whig history of international trade theory, which tells a straight development starting with Smith's alleged theory of absolute advantage via the classical theory of comparative advantage to the modern neoclassical theory of comparative advantage (Schumacher 2012). Smith is portrayed as deserving some credit, since his theory is ultimately based on the right idea, the territorial division of labor.…”

“…In the next section, I will briefly discuss the development of the pattern of trade in Smith's theory of foreign trade. This discussion is based on more comprehensive studies of the role of trade in Smith's theory of economic development (Schumacher 2016) and the positive part of his trade theory (Schumacher 2018). Then, I will trace how Smith has been (mis)represented in the history of international trade theory, starting with classical economists in the nineteenth century.…”

“…Poor countries will not remain backward as a result of foreign trade. Rather, the initially growing gap between rich and poor countries will be narrowed in the long run, since the economic growth of a country will eventually slow down and come to a halt, in Smith's theory (Schumacher 2016). In contrast, the uneven development interpretation assumes an indefinite divergence with international trade as the sole culprit.…”

“…But such a misleading use suggests a connection between Smith and the static theory of comparative advantage as it is presented in today's textbooks. Additionally, the theory of comparative advantage rests on rigid assumptions (Schumacher 2013), which Smith did not share, and to attribute it to Smith is another way of imposing nineteenth-and twentieth-century modes of thoughts on Smith.…”