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particular point on which Professor Sidgwick takes his stand,
the case of a common commodity, the weighty support of
Mangoldt.
Professor Sidgwick argues in the light of a well-chosen
example that, if there is a common product, the theory breaks
down.
‘Nor [taking Mill’s case of England exchanging cloth for the wine of Spain]
let us suppose that there is at least one other commodity—say corn—which is pro-
duced both in England and in Spain. According to Mill’s general theory of value, dis-
cussed in the preceding chapter, the relative values of cloth and corn in England
must be determined by their comparative costs of production; and, again, the
relative values of wine and corn in Spain must be determined in the same way.
But if we suppose cost of carriage to be eliminated, there is no reason why the value
either of wine or cloth should be altered by exportation ; hence the values of both
wine and cloth relatively to corn, and therefore relatively to each other, must be as
much determined by cost of production as the values of home commodities are ’
(Principles, Book ɪɪ. § 2, 2nd edition, p. 207).
It appears to me that an injudicious line of attack upon this
theory has been adopted by Professor Bastable1 when he dis-
putes the possibility of there being a product common to both
countries—cost of transport having been abstracted—except upon
the supposition that the cost of producing the commodities varies
with the amount produced. It is quite conceivable that, even on
the abstract hypothesis of constant costs of production and no
cost of transport, there should be a common product. It is
quite legitimate to suppose with Mangoldt,2 two countries, I. and
II. dealing in three commodities, A, B, C ; whereof A is produced
only in country I., B is produced only in country II., while C is
produced in both countries—exported from II., and imported into
I. One might even regard this phenomenon as normal, on the
plausible hypothesis that there are an indefinite number of
articles of trade, with every variety of cost of production.8
Professor Sidgwick therefore is quite justified in regarding the
absence of the phenomenon as ‘ rarely likely to be realized in
fact.’ 4 It is quite open to him to select this ground on which to
fight out the issue.
Joining issue with him on the proposition above quoted—
the values of both wine and cloth relatively to corn, and therefore relatively
to each other, must be as much determined by cost of production as the values of
home commodities are,
I submit that the word ‘ determine ’ might here be used in
one of two senses : either to mean that value varies proportion-
1 International Trade, Appendix C. ‘ Hermathena, 1889.
2 See the description of his views below, p 632.
3 Below, p. 634. 4 Loc. cit. 1st edition.