Was Adam Smith a Proponent of Absolute Advantage Theory? A formative history of an urban legend and lessons learned
Year：2019 NO：19003 Author：Satoshi Yoshii, Takahiro Fujimoto, and Yoshinori Shiozawa
This article argues that the widely accepted belief that Adam Smith was proponent of absolute advantage theory of international trade, which says industries with internationally higher physical productivities always export, is a fallacy that was created later than his time, and that he had recognized the concept of comparative advantage in the form of comparing unit production costs by taking into account international differences of both physical productivities (inverse of labor input coefficient) and wage rates. Smith was indeed discussing the possibility of international trade in the Ricardian situation in which one country is more productive than the other in all industries. We then explore the origin of the myth of Smith-as-absolute-advantage-theorist by investigating who and when it was created. We examined certain statements by James Mill, McCulloch, J.S. Mill, Bastable, Ingram, Viner, Schumpeter, etc., and found that the explicit claim of this myth was widely spread after the World War II.