Is that really the solution: Germany only exports cars and machines and imports all other consumer goods in counter-products?


The fairy tale of the international division of labor

Many important politicians swear by the international division of labor. They think it would be great for a country to specialize in certain commodities, then market them globally and, in return, cheaply import other products.


The idea of the international division of labor is old hat!
The thesis of the international division of labor is anything but new - it was already propagated in 1817 by David Ricardo. He implored the producing nations to focus on their country-specific strengths and to do most of what they do best.
As a classic example, Ricardo called Portugal, which was able to produce both wine and cloth cheaper than England. His then recommendation: Portugal should only produce wine, because there the cost advantage was particularly high and then import cloth in exchange for wine from England.

Theoretically, Portugal and England would indeed benefit from this deal (higher productivity). However, the dangers of monoculture (mutual interdependence), transport costs, etc., are largely ignored in this maids' bill. What happens in the event of a crop failure? What are the consequences of market changes (if other countries suddenly offer the same goods cheaper)?
And anyway: How should the necessary balance of the exchange of goods arise - should you force the English to expensive wine consumption, even if they would rather drink beer?


"International Division of Labor":
What's up with this idea, does it really bring a comparative advantage?

To clarify this important question, one should quietly learn lessons from history and look at the development of West Germany after 1949. The 60-year period until 2009 is divided in an ideal way into two independent blocks of equal size.
At the end of the 1970s, a change of system took place worldwide (unquestioned and unnoticed by the public): The protection of the domestic economy was abandoned by the massive reduction of tariffs, thus ushering in the age of global dumping competition (much the same as globalization) Ricardo had propagated it in 1817).

What was the result? Although the economy and productivity continued to grow after 1980 (albeit at a much slower rate), strangely enough, nothing came up behind them (even the modest growth rates did not materialize).
Real wages fell by almost 20 percent in the three decades after 1980, while they had increased by about 300 percent in the 30-year period before (1950-1979).
Details ...


"International Division of Labor":
The descent is denied and hushed up ...
Now the capitalized globalization lobby is not tired of twisting these exposing facts and tries to cover up the clear debacle with many dodges.
One eloquently speaks of a
market saturation that set in in 1980, apologizes for the increasing aging of society and the high costs of German reunification.

But such excuses are not very valid. As long as new products are invented and in demand, there is no market saturation!
As far as demographic trends are concerned, it has been going on for over 100 years without ever having raised any issues.
And the costs of German reunification? The removal of the debris landscape after the Second World War was much more difficult than the reconstruction of East after 1990 and has not prevented the rapid rise in prosperity.

What must be taken into account, however: In the 1980s, a revolutionary computer and microchip technology began, which triggered an extraordinary boost in productivity and its importance is approximately equivalent to the revolutionary inventions at the beginning of industrialization. The computer age should have brought the high-wage countries actually a particularly high increase in prosperity.


Which consumer goods (except food) are still produced in Germany?
And even with the few exceptions (automotive industry, mechanical engineering, chemicals): How high is the level of vertical integration when the value added comes largely from foreign suppliers?

"International Division of Labor":
Many politicians still cling to the master race ideology
What should one think of it when politicians unwaveringly regard Germany as a think tank and China as a workbench? What arrogance is behind this detached thinking! As if the Chinese were less intelligent or less powerful than the Germans.

In the long term, product development will always be located where production takes place. So this value creation process will increasingly migrate to the Far East, especially since research is much cheaper there (China trains ten times more engineers annually than Germany).
The export of German industrial products is becoming increasingly difficult and manufacturing verticals continue to decline - this trend will not be concealed in the long term, despite all accounting cosmetics.


200 years ago, global competition was still very different ...
To honor the salvation of Ricardo it should be admitted that at that time the grave wage differences did not exist (world-wide factory workers only received starvation wages).
With the stark wage differences of more than 1000 percent, as we unfortunately find today, Ricardo would certainly never have propagated an international division of labor and, on the contrary, regarded import duties as a basic condition for the preservation of one's own economic power.

The capital and globalization lobby, however, does not want to know about the changed circumstances, it continues to refer to Ricardo's ancient theses - knowing that she benefits most from them.

Continue reading: The international division of labor is counterproductive!
In addition:
How does economic growth come about?


Excuse me!
There is no equal opportunity - also with regard to the formation of opinions. While the capital (corporations, speculators, lobbyists, media, governments) can afford the best translators, I have to settle for financial reasons with a simple language program. I hope that the text is nevertheless reasonably understandable and that no mistakes have occurred. Thank you for your understanding.

Manfred Julius Müller, D-24939 Flensburg (Flensburg has about 90,000 inhabitants and is located on the German-Danish border).


Background and analysis:
In Germany wages have been falling since 1980. Why?
Germany: The brazen proclamation of skills shortage!
Globalization: the ignorance of the facts
The political and economic consequences of an brexit An analytical consideration from German view.
"We have to explain Europe better!"
When will the Dexit? (the withdrawal of Germany from the EU)
The capitalist Powers Act
Globalization: "One cannot produce that with us anymore!"
The fairy tale of the international division of labor
The international division of labor is counterproductive!
The fear of British Farmers before the Brexit!
The impact of globalization on developing countries
Brainwashing: "We want an open Europe!"
How much democracy can withstand the EU?


Ist die Globalisierung Basis unseres Wohlstandes?
Und leben wir auf Kosten der anderen?



© Manfred Julius Müller, Flensburg, Februar 2011, Nachtrag 2017

Current books by Manfred Julius Müller (unfortunately currently only available in German):
THE CAPITAL and the world economic crises - only Euro 5.80
THE CAPITAL and the welfare state - only Euro 7.90
OUT OF THE EU or persevere until the sinking? - only Euro 5,90
The free trade delusion - only Euro 6.50
Humanity knows no boundaries. Stupidity, but not too! - only Euro 6.80
Only Fairtrade! The capitalist Reformation! 35 theses for a fairer world! - only 5,- Euro

Manfred Julius Müller has analyzed global economic processes for more than 30 years. He is the author of various books on the topics of globalization, capitalism and politics. Some texts by Manfred Julius Müller also found their way into textbooks or are used for teacher training.

The analyzes and texts by Manfred Julius Müller are non-partisan and independent!
They are not, as is often the case, sponsored by state institutions, global players, corporations, associations, political parties, trade unions, the EU or capital lobby!