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THEORY OE INTERNATIONAL VALUES

629


Real revenue being thus defined, the proposition that it is
diminished by the liberation of trade may be . true, but is not
important ; as Bertrand urges in an interesting criticism on
mathematical economists.1

Another objection to Cournot’s proposition raised by Prof.
Bastable is that it uses money as a measure ; whereas the value
of money is altered by an alteration in the terms of international
trade. It is tenable, however, that Cournot means to restrict his
theory to small disturbances of trade, the effect of which on the
level of money may be neglected. As far as this objection goes,
his reasoning may be as valid as Prof. Marshall’s application of
Consumer’s Rent,2 or Messrs. Auspitz and Lieben’s reasoning as
to the effects of a tax or bounty.3

Another objection to Cournot’s reasoning is that he does not
take account of the productive factors which, being displaced by
the importation of a commodity which had been produced at home,
are turned to the production of some other commodity. Cournot
himself has stated this objection, and endeavoured to meet it
(Arts. 93 and 86) ; but I do not feel certain that on this point he
gets the better of Hagen, to whom we now proceed.

(2) Hagenf—The mathematical method is not wielded by
Hagen more powerfully in defence of Free Trade than by
Cournot against it. Hagen constructs an ‘ exportation-formula ’
to represent the gain (or loss) resulting to the national income
from a new export (p. 11). This gain consists of three parts:
(1) the addition to profits consequent upon the additional pro-
duction of the exported article ; (2) the loss of profits consequent
upon the transference of productive factors from other industries
to the production of the exported article ; (3) the loss to con-
sumers consequent upon the rise of price. This formula appears
open to three serious objections: (α) It is assumed that profits
in different industries at the same time are a fixed proportion of
the expenses of production. This Ricardian assumption may
perhaps pass. But not so (δ) the Ultra-Ricardian neglect of all
interests but those of the capitalist ; no account being taken, as I
understand, of the effect of the supposed change upon wages
and rent. Lastly (c), the effect on the consumers’ interest is not

ɪ Journal des Savants, 1883.

2 See Economic Journal, vol. iv. p. 156. Cf. Giornaledegli Economisti, September
1894, ‘ Sulla Consumers’ Rent.’

3 Cf. below, p. 638.                       .

4 Die Nothwendigkeit der Handelsfreiheit filr das Nationaleinkommen Mathe-
matisch nachgeweisen,
Von Karl Heinrich Hagen, Konigsberg, 1844. See article
on Hagen in
Palgrave’s Dictionary.                       .



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