Harmonic and Conflict Views in International Economic Relations: a Sraffian view

Research on the recent European financial crisis has prompted exploration of the harmonic and disharmonic views of international economic relations. The former, more liberal view is based on the Ricardian and neoclassical trade theories. The latter is derived from pre-Smithian mercantilist conflict views of international trade. Here we have investigated the contribution that Sraffian theory can offer the latter stream of thought. This contribution cannot be underestimated since it provides a rigorous analytical rebuttal of the neoclassical theory of international trade and capital flows and supports the existence of absolute advantages, which are a source of potential trade conflict between nations. Kaleckian theory may also vindicate mercantilist attention to trade surplus. Summing up, the paper is an exploration of the complementarity of the classical conflict view of income distribution and the disharmonic traditions of International Political Economy in opposition to the harmonic beliefs of economic and political liberalism.