54

INTERNATIONAL TRADE

PN Pog

purely domestic, in the sense that they rest on the standards of
living in the groups, which are the outcome of historical and social
forces in the given country.
But the causal sequence — still speaking of the domestic situation
 by itself — may not be so simple. It may be that the rates
of pay in the several groups are settled by the mere conditions
of demand; or, if not absolutely settled, affected or modified
by those conditions for periods so long that they cannot be
ignored even in inquiries that disregard short time phenomena.
As is well known to the reader conversant with the history of
doctrine on this topic, Cairnes treated the relations between noncompeting
 groups as dependent solely on demand. The principle
of the play of reciprocal demand, to which Mill had turned for
the explanation of the barter terms in international trade, was
applied by Cairnes to the explanation of exchange between groups
within a country. That group whose services (goods) were much
wanted by other groups, and which itself wanted little of the
services of other groups, was able to secure the greatest advantage
from the exchange; it had the highest scale of earnings. Cairnes
did not proceed to the apparently obvious corollary that numbers
played a part in those relations. Any group whose numbers are
small, confronted by another whose numbers are larger and exchanging
 products with that other, is likely to secure advantageous
terms in the play of reciprocal demand. And the question of
numbers raises that of the increase of numbers — the marriagerate
 and birth-rate, and the standard of living. But this series of
questions, to repeat, was never raised by Cairnes; the problem was
treated by him as one solely of demand. And it may well be that
we are not in a position to say much of the other side of the problem
 — the conditions of supply. The standard of living, as
between different groups, can hardly be said to be well defined,
still less to be well settled. Of necessity it acts very slowly in its
effect on numbers. During the course of the period which must
elapse before it can operate with effect — one or two generations —
the impact of demand may shift. The relative rates of pay may
shift accordingly, rising here, falling there; and the effects of a