INTERNATIONAL TRADE
given number of days’ labor, supposed necessary for producing a
given number of commodities, will constitute the cost of the com-
modities. It is not money cost or expenses that we start with,
but labor and effort. Cost is low when little labor is needed to
produce a given physical quantity, hich when much is needed. It
is inverse to the effectiveness of labor: the greater that effective-
ness, the lower 1s cost.
I am aware that the point of departure thus chosen is open to
criticism. It is that of Ricardo, Mill, and their successors; and
the treatment of the subject at the hands of this school has always
had a certain air of unreality, as if divorced from the actual conduct
of trade. Instead of beginning with labor cost, as they did, we
might first consider cost as understood in the everyday world —
money cost, or supply price — and proceed thereupon to the labor
cost. Either course is justifiable. The choice between them is
one of methodology, or rather of the better method of exposition.
In the chapters that follow the relation between the two kinds of
cost, and their respective bearings on international trade, will
receive careful consideration. The realities will not be neglected,
even tho the first approach may seem far removed from the
channels of actual trade. And the conclusions eventually reached
would have been the same, and would have been reached by essen-
tially the same reasoning if the starting point had been money cost,
and if there had then been a working back to labor cost. The
question, as just remarked, is one of procedure. I will not pretend
that the plan of the present book is clearly the better. The reader
is asked at this stage merely to bear it in mind.
For the present, then, we define cost in terms of quantity of
labor, not in terms of money cost or of supply prices. On this
basis we differentiate the three cases. Representative figures, of the
kind which will be freely used in the ensuing pages, are as follows :
Case I. ABSOLUTE DIFFERENCES
In the U. S. 10 days’ labor produce 30 lbs. copper
Pal AT, B.A0.4" % ” 15 yds. linen
Germany 10 (07 2? 2” 15 lbs. copper
” Germanv 10 72 23 30 vds. linen
