Changing Exposure to Trade of wealth and income?To answer that whether it is advanced or backward and question we require a rudimentary model (2)whether its land-labor ratio is high or of the political process and a somewhat low.We recognize,in other words,only more definite one of the economy. economies that are (1)capital rich,land rich,and labor poor;(2)capital rich,land poor,and labor rich;(3)capital poor, Simple Models of the land rich,and labor poor;or(4)capital Polity and the Economy poor,land poor,and labor rich. I shall assume of domestic political processes only two things:(1)that the Political Effects of Increasing beneficiaries of a change will try to con- Exposure to Trade tinue and accelerate it,while the victims of the same change will endeavor to I shall now try to demonstrate that the retard or to halt it;and(2)that those who Stolper-Samuelson Theorem,applied to enjoy a sudden increase in (actual or our simple model,implies that increasing potential)4wealth and income will exposure to trade must result in urban- thereby be enabled to expand their polit- rural conflict in two kinds of economies ical influence as well (cf.Becker 1983).As and in class conflict in the two others. regards international trade,(1)implies Consider first the upper right-hand cell that the gainers from any exogenous of Figure 1:the advanced (therefore change will seek to continue and to capital-rich)economy endowed abun- expand free trade,while the losers will dantly in labor but poorly in land. seek protection (and,if that fails,imper- Expanding trade must benefit both cap- ialism);5(2)implies that those who gain, italists and workers;it harms only land- or are positioned to gain,economically owners and the pastoral and agricultural from exogenous changes in international enterprises that use land intensively.Both trade will increase their political power as capitalists and workers-that is to say, well. almost the entire urban sector-should Economically,I propose to adopt with favor free trade;agriculture should on the minor refinements the traditional three- whole be protectionist.Moreover,we factor model-land,labor,and capital- expect the capitalists and the workers to and to assume,for now,that the land- try,very likely in concert,to expand their labor ratio informs us fully about any political influence.Depending on pre- country's endowment of those two fac- existing circumstances,they may seek tors.No country,in other words,can be concretely an extension of the franchise,a rich both in land and in labor:a high reapportionment of seats,a diminution in land-labor ratio implies abundance of the powers of an upper house or of a land and scarcity of labor;a low ratio sig- gentry-based political elite,or a violent nifies the opposite.(I shall later relax this "bourgeois"revolution. assumption.)Finally,I shall simply define Urban-rural conflict should also arise in an advanced economy as one in which backward,labor-poor economies (the capital is abundant. lower left-hand cell of Figure 1)when This model of factor endowments in- trade expands,albeit with a complete evitably oversimplifies reality and will reversal of fronts.In such "frontier" require amendment.Its present simplicity, societies,both capital and labor are however,permits us in theory to place scarce:hence both are harmed by expand- any country's economy into one of four ing trade and will seek protection.Only cells (see Figure 1),according to (1) land is abundant,and therefore only agri- 1123Changing Exposure to Trade of wealth and income? To answer that question we require a rudimentary model of the political process and a somewhat more definite one of the economy. Simple Models of the Polity and the Economy I shall assume of domestic political processes only two things: (1) that the beneficiaries of a change will try to con￾tinue and accelerate it, while the victims of the same change will endeavor to retard or to halt it; and (2) that those who enjoy a sudden increase in (actual or p~tential)~wealth and income will thereby be enabled to expand their polit￾ical influence as well (cf. Becker 1983). As regards international trade, (1) implies that the gainers from any exogenous change will seek to continue and to expand free trade, while the losers will seek protection (and, if that fails, imper￾iali~m);~(2) implies that those who gain, or are positioned to gain, economically from exogenous changes in international trade will increase their political power as well. Economically, I propose to adopt with minor refinements the traditional three￾factor model-land, labor, and capital￾and to assume, for now, that the land￾labor ratio informs us fully about any country's endowment of those two fac￾tors. No country, in other words, can be rich both in land and in labor: a high land-labor ratio implies abundance of land and scarcity of labor; a low ratio sig￾nifies the opposite. (I shall later relax this assumption.) Finally, I shall simply define an advanced economy as one in which capital is abundant. This model of factor endowments in￾evitably oversimplifies reality and will require amendment. Its present simplicity, however, permits us in theory to place any country's economy into one of four cells (see Figure I), according to (1) whether it is advanced or backward and (2)whether its land-labor ratio is high or low. We recognize, in other words, only economies that are (1)capital rich, land rich, and labor poor; (2) capital rich, land poor, and labor rich; (3) capital poor, land rich, and labor poor; or (4) capital poor, land poor, and labor rich. Political Effects of Increasing Exposure to Trade I shall now try to demonstrate that the Stolper-Samuelson Theorem, applied to our simple model, implies that increasing exposure to trade must result in urban￾rural conflict in two kinds of economies and in class conflict in the two others. Consider first the upper right-hand cell of Figure 1: the advanced (therefore capital-rich) economy endowed abun￾dantly in labor but poorly in land. Expanding trade must benefit both cap￾italists and workers; it harms only land￾owners and the pastoral and agricultural enterprises that use land intensively. Both capitalists and workers-that is to say, almost the entire urban sector-should favor free trade; agriculture should on the whole be protectionist. Moreover, we expect the capitalists and the workers to try, very likely in concert, to expand their political influence. Depending on pre￾existing circumstances, they may seek concretely an extension of the franchise, a reapportionment of seats, a diminution in the powers of an upper house or of a gentry-based political elite, or a violent "bourgeois" revolution. Urban-rural conflict should also arise in backward, labor-poor economies (the lower left-hand cell of Figure 1)when trade expands, albeit with a complete reversal of fronts. In such "frontier" societies, both capital and labor are scarce: hence both are harmed by expand￾ing trade and will seek protection. Only land is abundant, and therefore only agri-