70 
oN 
kg 
INTERNATIONAL TRADE 
Fale 
yo 
unit of output. It means also that the effectiveness of the labor 
per unit is increased. The use of good tools and machines enables 
the same product to be got with much less of current labor. The 
illustrative figures just given would imply on their face that with 
the use of capital the total expense (the supply price) per unit 
becomes higher. For closer verisimilitude, they should look some- 
thing like this: ! 
INTEREST Do- 
CHARGE ToTAL MESTIC 
WAGES ToTAL AS BE- Ex- SuppPLY 
PER DAY WAGES FORE PENSES PRODUCE PRricE 
31 days’ current labor = $7 
U.S. $2 : | $17 $10 $27 30 copper $0.90 
$ 5 davs’ past labor = $10 $ pper $ 
But further — and here we reach at last the point which is of 
importance for the theory of international trade — this reduction in 
the total labor applied, the increase in the effectiveness of labor, the 
lowering of cost in terms of labor and in terms of money, the whole 
train of modifications — is likely to take different shape in different 
countries. And different not only between countries, but between 
commodities. Some countries use tools and machines more readily 
and more effectively than others; some commodities are more 
amenable to the machine processes than others. Comparative 
advantages and disadvantages emerge. 
These are advantages and disadvantages, be it remembered, 
arising from the relative effectiveness of the totals of the labor 
applied. They arise, not because the matter of return on capital 
is involved, but because a more complicated reckoning must be 
made of the effectiveness of labor. This fundamental fact is dis- 
ouised by the business man’s and the accountant’s ways of reckon- 
1 Observe that the figures indicate a diminution in the amount of current labor 
as a consequence of the use of past labor (capital) ; and therefore a diminution in the 
total labor for the same output, in the total money expenses of production, in the 
supply price per unit. The amount of current labor, 10 days before, now is but 
31 days; the total wages bill is $17, not $30; the total expenses of production are 
$27, not $40; the supply price per unit is lowered from $1.33 to $0.90. 
No doubt, for still closer verisimilitude, it would be desirable to make the pro- 
portion of past labor to current labor smaller. As there is greater use of plant, the 
element of past labor (represented in accounting by the depreciation charge) tends 
to figure less and less per unit of product in comparison with current labor (the 
“labor cost’”’ of accounting). The reader who is interested can easily work out 
further numerical illustrations.