That the Extent of the Internal Market is Limited by the International Division of Labour and the Relations of Production

Abstract

This chapter examines a number of theoretical problems posed in classical and neo-classical analysis and in modern bourgeois attempts to find more progressive solutions to them. These problems are posed on the one hand by the classical and neo-classical theses derived from Smith and Ricardo, which advocate an international division of labour and extension of the market through free trade and comperative advantage, leading to some countries’ specialisation in the production and export of staple raw materials for the external market in exchange for manufactures produced in other countries. On the other hand, we may distinguish the theses associated with Friedrich List, Gunnar Myrdal, Rai l Prebisch and lately Arghiri Emmanuel, who seek to challenge the classical thesis by invoking declining secular trends in the terms of trade and/or chronic unequal exchange that disfavour the low-wage raw materials producers, and who recommend an alternative policy of infant industry protection and import substitution intended to develop the internal market.