Ricardo's vice and the virtues of industrial diversity

Keen, Steve (2017) Ricardo's vice and the virtues of industrial diversity. Journal of American Affairs, 2017(Fall), pp. 85-98. ISSN (print) 2475-8809

Abstract

That specialization is the primary source of economic gain has been accepted by economists ever since the famous example of the pin factory with which Adam Smith opened The Wealth of Nations. However, this and Ricardo's "Comparative Advantage" example ignore that machinery cannot be moved from one industry to another. Empirical research also shows that gains arise not from specialisation but from diversity.

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