International trade

Bibliographic data

Monograph

Identifikator:: 1758394757

URN:: urn:nbn:de:zbw-retromon-136209

Document type:: Monograph

Author:: Taussig, Frank William http://d-nb.info/gnd/120199459

Title:: International trade

Place of publication:: New York, NY

Publisher:: Macmillan

Year of publication:: 1927

Scope:: XXI, 425 Seiten; graph. Darst.

Digitisation:: 2021

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part I. Theory

Collection:: Economics Books

WAGES AND PRICES IN DIFFERENT COUNTRIES 37 money incomes foreign commodities which are cheaper than they would be if produced at home. Regard, however, must be had also to what may be called the absolute effectiveness of labor. On this something has already been said, in our consideration of the nature and consequences of absolute differences in cost; and more will be said when we come to the competition of two (or more) countries when exporting the same goods to a third country.! The bearing of absolute effective- ness can be readily indicated. Referring to our illustrative case, we might modify the figures by supposing that in the United States five days of labor, not ten, were required for producing the stated quantities of linen and wheat. We should then have the following : In the U. S. 5 days’ labor t3) » U. S. 5 » 1) ” Germany 10 ” ” Germany 10 ” WaGes PER DAY $3.00 2° WM) - - - “4 D1 ToraL WaGEs tu 10 PropUucE >) linen “ wheat *5 linen 10 wheat Domestic SuppLY PRICE $0.75 30.75 $0.663% $1.00 The United States here has the same comparative advantage as before, but a greater absolute advantage in both commodities — an even greater all-around effectiveness of labor than was before assumed. Money wages in the United States are correspondingly higher — twice as high as in the original supposition. But the domestic supply prices remain as before; and so it is as regards the sharing of gains ascribable to the barter terms of trade. The general level of prices is not necessarily higher in the country having the more effective labor, the more favorable terms, the larger gains from international trade. True, prices of international goods will be at the same level (still barring cost of transportation) in the favored countries and in those not favored. But prices of domestic goods obey laws of their own. Some of them may be higher in price than abroad, some may be lower; and the general level of domestic prices may therefore be higher or lower. So far as the effectiveness of labor in producing domestic goods is great (great, that is, in comparison with that of labor applied in other 1 See Chapter 10.

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