Obsolete Factors in the International Economy or Why Tortoises Never Beat Mechanical Rabbits

Mr. Hudson's paper attempts a sweeping explanation of what still the modern world's greatest problem: the relative stagnation in destitu? tion of a third to a half of mankind. Such a paper must of necessity have its faults, some serious, but no critique of them, however justified, can be a substitute for or be allowed to obscure a confrontation of the main argument. Unfortunately, Mr. Hudson, himself, too diverting with irreverent swipes at received classical and neo-classical trade theory. I tend to share his iconoclasm, but in view of the strong opposition, which, I presume, his Obsolescence and Ghetto theses invite, a more irenic challenge would have been more effective. Theorists who apparently accept for their analytical framework the Heckscher-Ohlin-Stolper-Samuelson (HOSS) model are simply not as naive and do not believe it has as much hoss power, at least in policy matters, as Hudson implies. In G. M. Meier's The International Economics of Development,1 probably the best and most recent compendium of the literature, one finds extremely judicious and cautious reasoning from theory and little neglect of em? pirical findings, such as they are. Still, in fairness to Mr. Hudson, the new conventional subtleties are ever so gently, but naggingly persistent, if not biased, in reminding poor countries of the dangers of ill-afforded losses from trade restrictions, of the logically valid, but . infant economy case, and so on. Neo-classical theorists may admit, though not entirely, to the justice of Mr. Hudson's critique of the HOSS model, but they typically retreat to a methodological citadel which to them seems impregnable whereas it may be more an indication of intellectual impermeability. As Harry G. Johnson puts it, Fundamentally, the theorem, what I call the HOSS model, is not a prediction concerning the real world. Rather it must be interpreted as an enumeration, deduced by the process of theo? retical abstraction, of the factors that are present in the real world and prevent the realization of factor-price equality, an equality which would characterize world economic efficiency.2 In effect, the economist's mis 153

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