But Exchange is so separate an action that students of Economics have
agreed to treat it as a sort of chapter by itself, and we will do so
here.
The characteristic of Exchange is that you take a thing from a place
where it has less value to a place where it has more value, thus adding
an economic value to the thing moved and so creating wealth. In the
same transaction you bring back something else against it, which has
more value in your own place than it had in the place from which you
took it, that is again adding an economic value and therefore creating
wealth. We saw how this was in the case of the salt and the meat, and
so it is with thousands upon thousands of exchanges going on all over
the world.
For instance, we in England have grown fond of drinking tea in the last
200 years. But our climate will not allow us to grow tea. Tea can only
grow in a very hot country.
Now in very hot countries specially heavy labour upon metal work is not
to be expected. Men are not fit for it. But in this cool climate men
are fit for it, and also men here have through long practice become
very skilful at working metal: smelting iron, for instance, and making
it up into machines.
Therefore, there is a double advantage to us and to the people who live
in the hot countries where tea is grown if we _exchange_. We send them
metal things that we have made and which are useful to them, and which
they could hardly make themselves, or only with very great difficulty
(and, therefore, at a great expense of energy), and we get from them
tea, which we could not grow here except in hot houses: that is, at
much more expense of energy than is needed in the countries where tea
grows naturally out of doors.
When there are present two or more objects of this kind, such that the
exchange of them between two places will benefit both parties, we may
speak of “_a potential of exchange_,” stronger or weaker according to
the amount of mutual advantage derived.
This word “potential” you will not find yet in many books, but it is
coming in, for it is a very useful word. It is taken by way of metaphor
from Physical Science. When there is a head of water over a dam, or a
current of electricity of such and such an intensity, we talk of the
“_potential_” and measure it. For instance, we say this electrical
current is double the potential of that, or the head of water working
such and such turbines is at double the potential of another head of
water in the neighbourhood. In the same way we talk of a “potential” of
exchange, meaning a tendency for exchange to arise between two places
or people because it is of mutual benefit to both.
Potentials of exchange come into existence not only through difference
of climate or differences of habit, but also through what is called
the _Differentiation of Employment_, which is also called Division of
Labour.
Public-domain text, read in full here on John Shaqi.
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