Destructive Trade and Its Effects on the Global Economy

This lecture was offered in honor of Professor Robert Mundell; a most fitting coincidence since the speaker was his classmate at MIT in 1955, exactly 55 years ago, and the topic emanated from our joint study with Professors Kindleberger and Samuelson at that time. The essence of the presentation can be summarized in its significant conclusions. The theory of comparative advantage as applied to real-world phenomena-and its practical free-trade recommendationsmust be rejected or at least questioned, especially when it comes to trade between the advanced and the developing economies. The more realistic, even if less elegant mathematically, theory of Destructive Trade-explained in the lecture-should be a better guide in defining world trade solutions and leading us in the long run out of the present global crisis.