On Developing Comparative Advantage in an Economy

Ted Talks, accessed 4/8/2018

This post aims to undermine the Ricardian notion of developing comparative advantage as a helpful strategy for society-wide economic development in the context of multiple other societies. Instead of passive, laissez-faire economic development, human societies are propelled more effectively into wealth and influence by making proactive, collective choices to concentrate, specialize, and develop new technologies and processes. Governments are the tools and institutions which facilitate that development more effectively, comprehensively, and equitably; not private market actors acting individually. History has borne this out most starkly in the United States (Delong and Cohen; Hacker and Pierson), and is applicable on the international scale as well across nations (Tsakok)


Some would challenge this notion though for reasons that can only be described as ideological, and based on the need to preserve an abstract concept called "freedom". I acknowledge that people are indeed free to make whatever choices they wish to make for themselves relative to others and the environment. However, I disagree that those actions and behaviors of the individual should come at the expense of other individuals. I will also add that I believe that individuals who are burdened by another individuals' behaviors have a right to not be burdened by the behavior of anti-social and less considerate and caring individuals. Because humans are interdependent, interconnected, and social creatures, who wouldn't survive as individuals alone in the wilderness, it stands to reason that governments and public institutions need to focus on the group level than on the individual in a singular form for their success. This may boil down to a difference in normative values and morals. However, I would argue that the morals of community, egalitarianism, and values that emphasize a group are more effective at achieving a good quality of life for most people than the morals of individualism, hierarchy, and values that focus on a singularly selfish person. This is a theme that is echoed in many different cultures, contexts, and time periods, from the Hindu concept of atman (ego) needing to be subsumed in one's dharma (holy work), to the Abrahamic emphasis on helping others who are less fortunate in Judaism, Christianity, and Islam; we are warned about the dangers of selfishness and the sin of greed. We can also consider the hyper-egalitarian nature of extant hunter-gatherer societies (Boehm) as another example of this drive for humans to be a part of something bigger than themselves, and to honor and support those who give more than they ask in return. Therefore, why should we entertain those notions or people that are not interested in being conscientious and courteous to other people?

Getting back to the core economics: the fact of the matter, and history demonstrates that collective, collaborative, and cooperative efforts as a group work better than blind and inconsiderate individualism, exploitation, and personal greed (see Delong and Cohen, Hacker and Pierson, and Tsakok's books). Society allowing for the passive specialization of what an area is already good at producing at the expense of other potential activities is a way of denying innovation and learning that could make a single area overall more wealthy on its own. By putting in work and resources to producing goods and services that may not be immediately financially profitable or part of the local area’s specialization, an area can potentially make greater developments for its own economic specialization, and diversify its local economic portfolio. This helps it remain more resilient and consistently relevant in the broader marketplace of the world. Indeed, this "start up" and "experimental" advantage can itself be a powerful engine of economic development, if resources and wealth developed from this specialization are used wisely to benefit the whole rather than a few.

In addition, market forces and, more accurately, market actors, are not often the most innovative, or positively innovative individuals on the planet. Business-led innovation tends to focus more on short-term commercialization innovations, and repeat "hit" innovations without further significant improvements relative to publicly funded research, which can be more flexible, patient, and useful beyond pure profitability (Mazzucato). Indeed, there is a difference between an innovation that leads to a marginally greater profit for a private entrepreneur (potentially at the expense of the rest of society and/or the environment), and one that helps advance the general, shared well-being of the socio-environmental complex (in which there is a genuine and shared net benefit to a means production or product). Markets left without regulation do not distinguish between healthy and desirable societal outcomes and unhealthy and undesirable societal outcomes, so long as the businesspeople and entities who are owning the means of wealth production get a sufficiently high enough rate of return from their efforts. This is why physical, social, and economic development is best left to a not-for-profit entity that is accessible and accountable to all members and factions of society, regardless of how much access they can afford.

We already have the beginnings of a different paradigm for the global market of ideas, information, and products. Imagine a world where countries and businesses compete to solve common problems of commerce, society, and the maintenance of local and global ecosystems and resources for present and future generations. Profit goes to those who are able to reduce costs and resources involved in the production of goods without significantly affecting quality and safety, with rewards going to those who put in the actual work of production instead of those who simply "own" the company or resources that are being used. Portions of surplus resources and wealth at the national and sub-national levels get reinvested and allocated in a democratic process to create great places to live, with a safety net that allows people to take risks without getting too badly hurt if their ideas and hopes don't pan out as they had hoped and planned. The rest of the surplus wealth that is produced goes back to the people who produced it for their efforts, to be used in the consumption and production of demand the economy as a whole needs to operate. Education, and ensuring access to quality education for as many people as possible, takes the lead, starting with ensuring the population grows into generally healthy, aware, and considerate adults who can independently learn and think. People with antisocial tendencies get identified at younger ages, so that we can invest in humanely helping them become more prosocial, considerate, and aware people. Conflicts between nations and subnational societies can be resolved through a judicial, nationally-independent non-profit organization that focuses on conflict resolution and negotiating workable local solutions to conflicts that can be enforced by organic, bottom-up formed, super-majority coalitions of nations, working in concert to prevent any one nation from becoming a global hegemon. National and subnational governments work with in a logic that is consistent with local sensibilities and traditions, with room for genuine and non-violent methods to hold leadership groups accountable to their society domestically and internationally. All of this can be funded by adaptive taxation from the private economies of the subnational, national, and international levels, such that the world can produce peace, political stability, and social, economic, and ecological conditions conducive for human development and thrivability. Furthermore, I hypothesize that it would be significantly less expensive to operate, and more stable and sustainable than deceptive, brutish, and nationally chauvenistic institutions and officials.

This may all be a pipedream that never gets carried out in practice. Based on the evidence I have seen, and the careful study of our lived world, I will remain staunch in my insistence that the way I outlined above is better at ensuring everyone's interests get served, including the antisocial individuals who would oppose such a broad and deep vision for human society. We create our own Hell, as we create the paradises we may temporarily live in. The point is that, thanks to experience and conscious understandings if history, we can deliberately and intentionally choose which one we enter and exit. We can begin to be independently able to work our way back to the many different sweet happy spots in existence when we are knocked off course, or disrupted by internal or external causes; the rewards of 13.8 billion odd Earth-years of history that we can consciously and conscientiously access.