Ratio Working Papers
Taxation and Domestic Free Trade
Abstract: In this paper it is argued that the domestic division of
labor and trade is organized according to the same principle as the
international division of labor and trade – the Ricardian comparative
advantages. After all, the ultimate source of these comparative advantages
is the individual. The comparative advantages of individuals then lend
themselves to groups of people, companies, regions and countries. It is
these that make it worthwhile for people to cooperate on any larger scale
at all; we all rely on them and they imply that there is room for everyone
in society. But just as tariffs ruin the international division of labor,
taxes and similar domestic government interventionism destroy the domestic
division of labor among people. This is illustrated by means of the
‘division of labor condition’, where taxes enter as a possible restriction
to trade, thus creating a Darwinist society of the survival of the fittest.
The least productive individuals and those who face the highest barriers to
trade run the risk of ending up on the outskirts of society. The more
productive ones will run the risk of overreaching as they are forced to
perform more and more tasks themselves. The result is not only more home
labor and more black markets, but also real barter and situations where
nothing gets done at all. To restore the division of labor, and to make
room for everyone who wants to participate in it, it is argued that
removing barriers to domestic trade is the only possible option.
Keywords: Division of labor; Comparative Advantage; Trade; Productivity; Growth; Taxes; Unemployment; Household Labor; Informal economy; (follow links to similar papers)
JEL-Codes: B30; B53; D13; D31; D51; D60; D70; E23; E24; E31; E60; F00; F10; F20; F40; H20; H30; J22; J23; J24; J31; J38; J44; J60; O11; O12; O13; O40; P16; (follow links to similar papers)
16 pages, April 29, 2004, Revised June 7, 2004
The publication refers to a Swedish version of the paper.
Before downloading any of the electronic versions below
you should read our statement on
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
- This paper is published as:
Johnsson, Richard, (2004), 'Komparativa fördelar och arbetsdelningsvillkoret' in Karlson, Nils, Dan Johansson and Richard Johnsson (eds.) Skatter & välfärd, pages 140-164, Ratio.
Questions (including download problems) about the papers in this series should be directed to Martin Korpi ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Design by Joachim Ekebom