<p>The concept of gains from trade did already existed in Smith. Blinder mentions that in the <a href="https://www.econlib.org/library/Enc/FreeTrade.html" rel="nofollow noreferrer">EconLib</a> as well. You can also directly read it in the Wealth of Nations by Smith:</p>
<blockquote>
<p>It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.. . . If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage.</p>
</blockquote>
<p>Either the author made a mistake or author refers to the fact that Menger provided rigorous positive explanation for the phenomenon.</p>

CC BY-SA 4.0
2023-02-06T16:17:30.877Z
2023-02-06T16:17:30.877Z
1muflon1
<p>Here's the <a href="https://www.econlib.org/library/Enc/bios/Menger.html" rel="nofollow noreferrer">EconLib page</a> for reference. In the third paragraph, it says</p>
<blockquote>
<p>Menger used his “subjective theory of value” to arrive at one of the
most powerful insights in economics: both sides gain from exchange.
People will exchange something they value less for something they
value more. Because both trading partners do this, both gain.</p>
</blockquote>
<p>I thought the idea of mutual gains from trade come from Adam Smith! Was I wrong all along?</p>

<history-economic-thought><austrian><adam-smith>
Mutual gains from trade: did Smith come up with the idea or did Menger?
Joebevo
# Mutual gains from trade: did Smith come up with the idea or did Menger?

(Asked by: username_0 on 2023-02-06)

Here's the [EconLib page](https://www.econlib.org/library/Enc/bios/Menger.html) for reference. In the third paragraph, it says

> Menger used his “subjective theory of value” to arrive at one of the
> most powerful insights in economics: both sides gain from exchange.
> People will exchange something they value less for something they
> value more. Because both trading partners do this, both gain.

I thought the idea of mutual gains from trade come from Adam Smith! Was I wrong all along?

**Tags:** history-economic-thought, austrian, adam-smith


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## 1 answers

### Answer by username_1 on 2023-02-06. Score: 1

The concept of gains from trade did already existed in Smith. Blinder mentions that in the [EconLib](https://www.econlib.org/library/Enc/FreeTrade.html) as well. You can also directly read it in the Wealth of Nations by Smith:

> It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.. . . If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage.

Either the author made a mistake or author refers to the fact that Menger provided rigorous positive explanation for the phenomenon.


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