Comparative and Absolute Advantages

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David Ricardo was an 18th and 19th century champion of free trade (the majority of this work in on this issue) but also wrote about the value of labor in his “labor theory of value” (which would influence Karl Marx” Ricardo argued that wages are and should be determined by the price of food – which is in turn determined by the cost of producing that food, which is in turn determined by the amount of labor that is involved in the food; in other words. (This may seem to be a somewhat circular argument, but can also be explained in a more linear way: Labor determines value.) (more…)