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THE ECONOMIC JOURNAL
The answers given to the problem which is presented by
f supposing the fall in wages not to extend beyond the group of
trades in effective competition with the principal industries of
Sheffield ’ (p. 397) seem rather loose from the mathematical point
of view. Consider for instance the second of the cases dis-
tinguished on p. 397, 1 the demand of foreign countries for
Sheffield wares ’ not increased in proportion to their increased
cheapness. The answer that there is no answer—‘ what the
exact character of this readjustment would be it is impossible
à priori to say’—appears to be inaccurate. The case would
seem to be that which is represented by our ABCDEfGHI
variety (2) and (4). Accordingly the exporting country will be
damnified 1 by the alteration in the terms of trade.
■ The only defence which can be made is that by a fall of wages
Cairnes means only a diminution in the proportion of the national
dividend accruing to the wage-earner; not, as it is natural in
this connection to understand the term, the diminution in the
absolute amount of commodities which the wage-earner obtains
per piece.2 But, as already argued with reference to Mill,
this Ricardian definition, however applicable to the case
of an isolated country where the labour-cost of money may
be assumed to be constant, is less inappropriate to a country
affected by international trade, with respect to which the
Ricardian proposition, ‘ high wages do not make high prices ’
(invoked by Cairnes, p. 390), is deceptive. Cairnes' statement
thus defined no doubt is true ; but it is misleading in the absence
of a more explicit enunciation of that definition.
It will be understood of course that this criticism of details
does not touch Cairnes' main contention against popular fallacies,
on the subject of low wages. The extreme difficulty of our
science is illustrated by the reflection that not only are first
appearances and common sense—what Cairnes calls ‘ the com-
1 It is curious that in his Australian and Sheffield examples Cairnes seems to
refer principally to that aspect of the problem which may present least practical
interest, namely, what would be the effect of a lowered rate of wages upon the
country in which they are lowered, abstracting from competition in foreign trade.
However, his answer that there is no effect is to be understood as applying to the
two more practical questions, (1) what would be the effect on a country dealing with
the one in which the wages are lowered ; e.g. is America prejudiced by the prevalence
of pauper labour in the countries with which she trades ? (2) what would be the
effect of lowered wages in the country in which they are lowered with respect to
foreign competition ; e.g. does, or might, England by lowering wages obtain an
advantage over America in dealing with a third country ?
2 To interpret * wages ’ in this connection as day-wages is of course out of the
question. This sense belongs to the ‘ commercial view of the subject ’ dissipated
by Cairnes.