THEORY OF INTERNATIONAL VALUES
633
B, each the product of two units in the country in which it
continues to be produced, are valued at 2 and 2-∣ respectively, or
in other words exchange at the rate of 8A for 6B.
This theory brings into view an incident which is apt to be
masked as long as we confine ourselves to the case of two com-
modities, the classical ‘ cloth ’ and ‘ linen ’—namely, that it is not
in general possible to determine a priori, from a mere observa-
tion of the costs of production in the respective countries before
the opening of the trade, which commodities will be imported
and which produced at home. ‘ Comparative cost ’ cannot be
ascertained by simply comparing the costs of different articles in
the two countries. Thus if o' in the figure be pushed up a little,
the distances o' a', o' b', &c., being preserved constant, C will
become an export (from country No. I.) instead of an import.
But the position of o' depends not only on the cost of production in
each country, but also on the law of demand in each country for
the different commodities.
This incident is illustrated by one of Mangoldfs examples, in
which the costs of production of five commodities in the two
countries before the trade may be thus represented (p. 218)—
ABCDE
I. 4 7 6 8 5
II. 5 9.3 7 4
Upon a certain hypothesis as to the amount of each
commodity demanded by each country (it being recollected that
the real cost laid out on each article by each country is supposed
to be constant), it is found that A and B are produced only by
No. I., C and E only by No. IV., while D—“ the measure of the
relative productivity of the two countries ”—is produced in both.
But if the quantities demanded were different, D would be
produced only in No. I. (pp. 220-222). From the examples in
the textbooks it might have been supposed that D would
necessarily have been exported from the second country, and E
from the first ; since thus the second country could get its E
cheaper—namely, at a rate less than f D for one of E ; and the first
country could get its D cheaper—namely, at a rate less than ⅞ E for
one of D. But the truth is that in general no conclusion of
the kind can be drawn pending the determination of the relation
on the international market between the productive powers of
the two countries, the ratio which we have designated as v. It
is as the material embodiment of this relation between quantities of