THEORY OF INTERNATIONAL VALUES
621
ately to cost ; or that value varies with, but not in proportion
to cost.1 For example, the first sense is to be understood when
Professor Sidgwick, referring on an earlier page of his book to
domestic trade, speaks of ‘ the Eicardian theory of the deter-
mination of value by cost of production ’ ;2 the second sense is
to be understood' when it is observed by the present writer a
few paragraphs below that ‘ the international market is deter-
minate.’3
The first sense, according to which the proposition under con-
sideration contradicts the received theory of international value,4
might have been expected here. But is is expressly disowned by
Professor Sidgwick when he says, ‘ It does not of course follow
that the wine and cloth will exchange for each other in propor-
tion to their respective costs.’ 5
In the second sense the proposition under consideration does
not contradict the received theory. For it is part of that theory-
that international values are affected by cost in some way, though-
not in the same simple way as domestic values. For example,.,
one of the propositions in the fifth section of Mill’s classical
chapter is that a change in the cost of production of a commodity
will in a certain case be attended with a less than proportionate-
change in its international value. The principal object of our
Parts I. and II. is to ‘ determine ’ the changes in international,
value which are consequent upon changes in cost of production,’,
including under cost taxation. In the second sense then the-
proposition is true ; but it does not convict Mill of error. Yet.
this is the sense in which Professor Sidgwick seems to employ
the proposition. But I hesitate to attribute an ignoratio elenchi
to the greatest living master of dialectics.
A more certainly valuable contribution to the subject is made
in the chapter on Protection ; to which our first and second
parts are indebted.6 In this chapter the distinction between the
1 I have endeavoured to distinguish the two meanings in the article on Exchange
Value in Palgrave’s Dictionary of Political Economy. The distinction is quite clearly
indicated by Mill (Pol. Econ., Book III. ch. 18, § 9 and § 5).
2 Principles, Book II. ch. 2, § 9. 3 Below, p. 622, par. 5.
4 It may be observed that the supposed product common to both countries, far
from evidencing the truth of the proposition under consideration—as the turn of Prof.
Sidgwick’s sentence might suggest—is properly employed by Mangoldt as the very
type and measure of that difference in the productivity of the two countries from
which follows the truth of the received theory, the falsity of the proposition in the
first sense. See the example cited below (p. 632), where the (real) costs of producing
C, the common product in the respective countries, are in the ratio 3 : 4.
5 Note to p. 207, second edition, and text of p. 218, first edition.
6 Ante, pp. 49, 439.
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