Alright, I promised you some depth, some background with regards to this idea on how an internal market functions from an economic point of view or this idea that integrating would lead to more wealth, more economic growth and that is better in order to avoid war. If you want to understand that, I'm not going to do that in this video because I'm quite unable to do so because I'm not an economist, as I said. But you would have to go into the classical economics. So, and basically the theories of a Mr. Ricardo, who's being regarded as one of the classical economists, next to Adam Smith, for example. Ricardo has this traditional example where he, as economists love to do, simplifies the world around him.
Where he said, well let's assume that there's only two countries. Let's assume that there's the United Kingdom, and let's assume that there's Portugal. And let's assume that they only produce two different products. They both produce wine, and they produce wool. Arguably, wine growing goes better in Portugal, whereas wool production would be more beneficial in the United Kingdom.
Let's say they don't trade with each other, so they each make their own wool and they make their own wine. That means that the United Kingdom can make a total amount of products, they can make a certain amount of wine, they can make a certain amount of wool. And Portugal can make a certain amount of wine and it can also make a certain amount of wool.
If you add all those, all two of those countries together, you'll have sort of the total production in that very simple world. Two countries, two products. You have a total production in wool, you'd have a total production in wine.
Ricardo researched that if you were to trade with each other, if you were to allow to specialize, and obviously our society has specialized enormously. I mean, 300 years ago my forefathers would have known exactly how to grow their own food and I've tried. But well, the tally on my part is, I think, well over two years of trying two cucumbers and a tomato.
So I'm not actually good at knowing how to grow my own food. So in that sense there has been a lot of specialization in our society. I'm talking into a camera where I haven't the foggiest idea on how that thing works, but it works, as if by magic.
But Ricardo said, if you were to trade, so if you were to allow to do countries to do what they're good at, then something strange happens. So if you were to say, let Portugal, Make all the wine it can do, so to reroute all its resources. Not to both produce wine and wool, but to only produce wine. And the United Kingdom would do the same with wool.
So no more wine, but only wool. And they were to trade with each other. So that means that Portugal would be able to buy whatever wool they needed from the United Kingdom.
and that the United Kingdom could buy whatever wine they would want from Portugal, they would actually be able to produce more than what they were able to produce earlier on, when they didn't trade. So actually, Ricardo pointed out that there is sort of creation of wealth out of nothing. It's the same countries, it's the same products, but if you are to trade, if you are to specialize, if you are to use your resources as efficiently as possible, that leads to more wealth and that helps in achieving those goals because obviously now the United Kingdom and Portugal are dependent on each other for their wool and their wine respectively, so they need each other and because it's a leads to more economic wealth and more economic growth, it is less likely that that the people living in the United Kingdom and Portugal would want to wage war on each other because they're happy, they earn money and they can buy all the wine in the world they want, so there's no need for them to do that. A third and additional The benefit of this is that you form an economic bloc and that obviously the European Union made up of 28, 27, depends, 28 at the time of filming, maybe 27 when you're looking at this.
member states can form a big economic block against other large economies in the world. So it also from a more sort of geopolitical strategic point of view provides for a better position of competition within that world. On that example, I If you want to read that, the literature that we use doesn't necessarily provide you with that particular example, but you can find it in Catherine Barnett's book on the substantive law of the European Union.
She explains exactly how that works. Thank you. See you in the next video.