Analogy with human specialization is flawed, because human attention span is limited. Even there the famous Heinlein quote on versatility still applies.
I understand international politics are completely different, but it is hard for me to understand how comparative advantage would not be useful at that level as well.
But for commonly used goods that every person needs, every country would benefit from producing these on their own, thanks to various synergies.
Specialization has also transaction cost. If you're skilled it might be better to plumb some things yourself than call a professional and risk him being a hack.
So I don't think it's one system being better than other. Rather, specialization is like paralelism - there is a transaction cost due to nonlocality, but also better scaling. So, like with paralelism, the rule should be - try as much as you can to produce locally, and specialize only where the scale advantage becomes really strong (usually that happens with high-tech products that are needed in very low quantities - by centralizing production, knowhow is easier to apply and capital costs are easier to justify).
It's unambiguously true that free markets has made South Korea significantly, mind-bendingly wealthier than the North. And on the subject of fertility, birth rates are so low (1.8) that you have Kim Jong Un crying on national TV, begging women to have more kids.
Personally, I have this pet theory (irrational, it may be) that as the boomers die off across the West, newer generations will pick up having more kids and TFR will level off. Like new growth springing up in a forest after a wildfire burns up all the old, dry wood.
Something similar to the post-war baby boom.
If economic actors can choose what comparative advantages they possess (e.g. by moving the economic factors or through training or investment), the theory becomes meaningless. It turns into a predestination fallacy since it myopically focuses on geographical factors that happen to not matter that much in the modern world.
What economic advice would the theory of comparative advantage give to China in the 1960s?
If it is "just do the free trade", it would have been wrong. China started to implement its market reforms with dual pricing to protect its own citizens from the foreign markets.
Now that is an actual comparative advantage that is actually hard to replicate due to huge entry costs.
(To lower the costs of labor further you need to actually give out life basics for free! China gets away with this by having a huge population competing thus far, but it won't hold.)
The USA was unique in that it was always outspoken with patriotism, and to lesser extent with classical nationalism than usual. Maybe the US is reaching some stage where it grows its own proper form of good-old ethnic nationalism, whether it's a good thing or not...
There is an opportunity cost to closing the borders and trying to do everything yourself, which you are not considering.
If China believed in it theyd still be making cheap plastic tat. If the west hadnt believed in it China's industrial rise probably wouldnt have been quite so shocking - 90s/00s neolib economists thought China was shooting itself in the foot.
After all, it's easier to further an already existing advantage.
It sounds stupid, but so do many intellectual fashions of a bygone era.
What are they?
In this case, you also forget that the pricing signals have a time horizon, which is bounded by the expected time of survival of the private company being non-competitive. But government (society) can take a longer term view than a company that is influenced by pricing signals, See the LG example I gave elsewhere in this thread.
Another reason is incomplete information. Free market works in theory because you assume complete information; in the real world, this is not the case.
It's not a theory. Firms trade internationally because it's cheaper, not because they "believe" in free markets.
> But government (society) can take a longer term view than a company that is influenced by pricing signals
Private markets routinely make multi-decade bets; entire industries (mining, energy, infrastructure, biotech) work on 20–100 year horizons. Risk and time are already priced in.
> Free market works in theory because you assume complete information
Free markets don’t "assume" anything; they function through decentralized price signals. And even with imperfect information, dispersed actors still aggregate and react to knowledge far better than any central planner can.