CHAPTER  VI

INTERNATIONAL  TRADE
The  theory  of  international  trade  is  another
section  of  Economics  which  one  may  be
tempted  to  represent  as  something  apart
from  the  general  theory  of  value.  It  is  a
commonplace  to  say  that  value  in  the  home
trade  is  settled  by  cost  of  production  ;  and  the
statement  is  broadly  accurate,  because  value  in
the  home  trade  is  determined  by  the  marginal
costs  of  different  quantities  of  a  thing  in
relation  to  the  demand  for  different  quantities.
On  the  other  hand,  it  is  equally  a  commonplace ­
  to  affirm  that  international  values
are  not  settled  by  the  principle  of  cost  of
production,  or  at  any  rate  not  directly,  but
by  the  principle  of  comparative  cost.  Ricardo
seems  to  have  been  the  first  to  propound
this  fruitful  doctrine;  but  it  was  left  for
later  writers  to  make  fully  explicit  that
the  doctrine  of  comparative  costs  is  an
integral  part  of  the  theory  of  home  values.
This  latter  is  one  of  the  ideas  that  I
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