Proposal preview

Unbalanced versus Unequal Exchange in Trade

This session will above all focus on reconstructing and explaining unbalanced trade in ecological goods like energy and land, and what role that has played for the economic and environmental history of nations. The goal is to encourage the use of critical, empirical-based approach (following Bairoch (1993) Economics and World History, Myths and Paradoxes). Innovative approaches in methods and critical and sound data discussions are welcome, along with more theoretical contributions.

Ever since Smith and Ricardo economists have generally regarded trade as welfare increasing for all parties, through the exploitation of comparative advantages. The extra value that is generated in a world system with trade according to comparative advantages is shared between trading partners, rich as well as poor, improving welfare for all in the longer term. However although the dominant trade models of the 20th century (Heckscher and Ohlin, Samuelsson, etc.) provide a convincing logic, predictions of wage equalization in the footsteps of globalization have not always been realized. This, in turn, has been blamed on imperfect markets, leading to debates as to whether tariffs and trade barriers are appropriate at certainly levels of development or with differences in markets between countries, arguments advanced by, among others, Keynes and Hicks in the 1930s.

At least since Marx there are also economists (for example Prebisch and Singer) and theorists who see trade relations as primarily exploitative and as a main reason for the differential economic performance of countries. This has been blamed on institutions (strength of labour unions or regulation between North and South for instance), or market position and strengths in negotiations, related to both relative factor endowments and the coercive power of rich states, especially within world-systems theory. This has allowed productivity increases in North have been taken out as higher wages, but in the south meant declining terms of trade.

It is important to make a distinction between analyses of unequal trade (viewed as exploitative), and a more restricted analysis of what may be called unbalanced trade in a single physical factor like land, labour hours or energy. Empirical findings of unbalanced trade in one factor could be used as an input to a discussion of unfairness and unequal exchange, but needs to be complemented with a model where the factors of production involved in trade are combined (Emmanuel 1972, Brolin 2007).

A main method to study unequal exchange in trade has been to investigate whether relative prices on internationally traded goods disfavour some countries or goods in a persistent way, for instance primary products (minerals and organic products) compared to industrial manufactured goods. In recent years ecological economics, human ecologists and economic historians have taken up this strand of research, but sought to measure inequalities through unbalances of direct physical flows embodied in trade, such as the number of work hours, amount of energy, area of land, or weight of products traded. These approaches define inequality very differently from traditional economic arguments, partly in seeking to establish effects from trade not generally incorporated into economic valuation, such as environmental impacts. It remains an open question as to how such inequalities can be understood collectively, and how important the exchange of ‘real’ goods and embodied qualities (such as labour, energy, land, and ecological services) are for our understanding of different paths of economic development and globalization.

Organizer(s)

  • Astrid Kander, Department of Economic History, Lund University, Sweden, astrid.kander@ekh.lu.se,

Session members

  • Paul Warde, Cambridge University, England, psw1000@cam.ac.uk
  • Dimitrios Theodoridis, Gothenburg University, Sweden, dimitrios.theodoridis@gu.se
  • Carl Nordlund, Central European University, Hungary, nordlundc@ceu.edu
  • Ernst Langthaler, University of Linz, Germany, Ernst.Langthaler@noel.gv.at
  • Hana Nielsen, University of Lund, Sweden, hana.nielsen@ekh.lu.se
  • John Brohlin, University of Lund, john.brohlin@ekh.lu.se

Proposed discussant(s)

  • Kaoru Sugihara, National Graduate Institute for Policy Studies (GRIPS), sugiharak@aol.com
  • Gareth Austin, Cambridge University, gma31@cam.ac.uk