第67章 Chapter V(43)

The three divisions of the book relate respectively to (1)value,(2)labour and capital,and (3)international trade,In the firsthe begins by elucidating the meaning of the word "value,"and under this head controverts the view of Jevons that theexchange value of anything depends entirely on its utility,without,perhaps,distinctly apprehending what Jevons meant bythis proposition.On supply and demand he shows,as Say had done before,that these,regarded as aggregates,are notindependent,but strictly connected and mutually dependent phenomena-identical,indeed,under a system of barter,butunder a money system,conceivable as distinct,Supply and demand with respect to particular commodities must beunderstood to mean supply and demand at a given price;and thus we are introduced to the ideas of market price and normalprice (as,following Cherbuliez,he terms what Smith less happily called natural price).Normal price again leads to theconsideration of cost of production,and here,against Mill and others,he denies that profit and wages enter into cost ofproduction;in other words,he asserts what Senior (whom he does not name)had said before him,though he had notconsistently carried out the nomenclature,that cost of production is the sum of labour and abstinence necessary toproduction,wags and profits being the remuneration of sacrifice and not elements of it.But,it may well be asked,How canan amount of labour be added to an amount of abstinence?Must not wages and profits be taken as "measures of cost "?Byadhering to the conception of,"sacrifice"he exposes the emptiness of the assertion that "dear labour is the great obstacle tothe extension of British trade "--a sentence in which "British trade "means capitalists'profits.At this point we areintroduced to a doctrine now first elaborated,though there are indications of it in Mill,of whose theory of internationalvalues it is in fact an extension.In foreign trade cost of production,in Cairnes's sense,does not regulate values,because itcannot perform that function except under a regime of effective competition,and between different countries effectivecompetition does not exist.But,Cairnes asks,to what extent does it exist in domestic industries?So far as capital isconcerned,he thinks the condition is sufficiently fulfilled over the whole field--a position,let it be said in passing,which hedoes not seem to make out,if we consider the practical immobility of most invested,as distinct from disposable,capital.Butin the case of labour the requisite competition takes place only within certain social,or rather industrial,strata.The world ofindustry may be divided into a series of superposed groups,and these groups are practically:"non-competing,"thedisposable labour in any one of them being rarely capable of choosing its field in a higher.(57)The law that cost of productiondetermines price cannot,therefore,be absolutely stated respecting domestic any more than respecting internationalexchange,.as it fails for the latter universally,so it fails for the former as between non-competing groups.The law that holdsbetween these is similar to that governing international values,which may be called the equation of reciprocal demand.Sucha state of relative prices will establish itself amongst the products of these groups as shall enable that portion of the productsof each group which is applied to the purchase of the products of all other groups to discharge its liabilities towards thoseother groups.The reciprocal demand of the groups determines the "average relative level "of prices within each group;whilst cost of production regulates the distribution of price among the individual products of each group This theorem isperhaps of no great practical value;but the tendency of the whole investigation is to attenuate the importance of cost ofproduction as a regulator of normal price,and so to show that yet another of the accepted doctrines of the science had beenpropounded in too rigid and absolute a form.As to market price,the formula by which Mill had defined it as the price whichequalises demand and supply Cairnes shows to be an identical proposition,and he defines it as the price which mostadvantageously adjusts the existing supply to the existing demand pending the coming forward of fresh supplies from thesources of production.