A New Reading of MARSHALL’s PRODUCERS’ Surplus: IMPLICATIONS FOR TRADE POLICY (A short note)
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Daniel Linotte, D.Phil.
This paper presents a new interpretation of the Marshallian surpluses, namely welfare concepts which were proposed by Alfred Marshall in his seminal work Principles of Economics, published in 1890. Relying on surpluses and considering the so-called 'small country case', according to traditional views, it is recommended to remove tariffs imposed on the imports of commodities because it should increase welfare and, in theory at least, the losers of such a trade policy orientation can be compensated with the use of adequate transfers from the winners. Despite extensive use, the concept of surpluses still raises key-questions that may alter the case for free trade. Thus, referring to a new reading of Marshall's work, it appears that – from a semantic perspective – the workers should also be seen as producers, which is not the case in the traditional paradigm. Assuming that the workers are producers, at least their wage rents must be taken into account when discussing the impacts of trade liberalization; in addition, the welfare costs of unemployment caused by the opening of national economies should be included – as a result, the case for free trade weakens. Considering the US, more than 2 million jobs might have been lost since 2000 because of the growing openess of the economy; however, companies had time to prepare for the new conditions and policy-makers could have better assessed and addressed the social and economic consequences of globalization – including new memberships in the WTO.
International trade; Alfred marshall; Producers’ surplus; Ethics; Industrial policy