LA DESINTEGRACION DE LA URSS Y EL NUEVO SOCIALISMO

123 China, Germany can either have 100,000 cars or 100,000,000 blouses or any combination of these two constrained by the formula: total labour = (cars × German labour per car) + (blouses × German labour per blouse) China on the other hand can independently choose any combination of blouses and cars constrained by the formula: total labour = (cars × Chinese labour per car) + (blouses × Chinese labour per blouse) The world as a whole (if these are the only two countries) is constrained by both these relations: world car production = German + Chinese car production, and world blouse production = German + Chinese blouse production.

As a result of these constraints we have: (1) Maximum world production of cars (MWy ) = Chinese + German maximum production = 180,000.

(2) Maximum world production of blouses (MWx ) = Chinese + German maximum production = 300,000,000.

Consider the point MWxy which represents production of 200,000,000 blouses plus 100,000 cars. This is the combined world production which occurs when Germany produces nothing but cars and China nothing but blouses. It can be shown that there is no way in which so many blouses and cars can be produced if each country produces some of both goods. From a starting point with both countries completely specialised, let Germany decide to produce 90,000 cars and 10,000,000 blouses, and let China decide to produce 10,000 cars and 175,000,000 blouses. Total world production of cars will be unchanged at 100,000 but world production of blouses will fall from 200,000,000 to 185,000,000. Any such move away from complete specialisation diminishes production of at least one of the goods. This is the essence of Ricardo’s argument in his parable about the shoemaker and the hatter. It is a particular example of the class of problems that can be solved by the mathematical technique of linear programming.

International trade allows an increase in total world production as a result of specialisation. This additional production constitutes a source of profit that does not depend upon the direct exploitation of workers. Mercantile capital was able to tap this source of profit in the ancient and medieval worlds when direct production was under the control of classes of agrarian slaveholders or landowners. The ability of the trader to appropriate a share of the surplus was the foundation of the wealth of trading states like Rhodes and Venice.

The labour theory of value developed by Smith, Ricardo and Marx assumes that the equilibrium prices of goods within a country will be in proportion to their labour content.1 What can it predict about world prices? Let us consider 1 It is beyond the scope of the present work to examine the validity of the labour theory of value as applied to market economies. An interesting modern assessment is given by Farjoun and Machover (1983).