Principles of Political EconomyPerry, Arthur Latham
General
Principles of Political Economy
Perry, Arthur Latham
Economics
As a natural result of this diversity any two
of these villagers may profitably exchange their respective efforts
with each other, provided of course each has a desire for the product
of the other, to the manifest lessening of the effort of each
relatively to the satisfaction of each, and the more so as the
relative superiority of each to the other in his own trade is the
greater.
This point will repay some pains in minute illustration. If the
blacksmith can make and set horse-shoes only a trifle better than the
tailor could do this if he tried, and the tailor can make coats only a
little better than the blacksmith could make one if he chose, there
will be but a slight benefit to each in their changing works with one
another. For the sake of definiteness, let us say, that the tailor's
capacity for making coats is 6, and his capacity in making and setting
horse-shoes is 5; and also that the blacksmith's capacity for shoeing
horses is 6, and his ability in making coats is 5. Each has a relative
superiority to the other of 1 in his own trade; and if they exchange
efforts, as they probably would under these circumstances, there is
only an advantage of 2 to be divided between them.
Now let us suppose (what might easily become a fact), that the tailor
by exclusive and augmented attention to the conditions of his own
craft carries up his capacity for making coats to 15, the blacksmith's
efficiency in both the trades remaining the same as before. There will
now be an increased motive to both the artisans for exchanging
products with one another, and a larger gain to each than before as
the result of such exchange. The diversity of relative advantage as
between the two has now gone up from 2 to 11. The tailor can now make
a coat much better and quicker than before; and though the blacksmith
owing to his inertness can neither make nor set horse-shoes any better
than before, still less make coats any better, he will after all by
still trading with the tailor reap a part of the benefit of the
latter's increased efficiency in making coats; the new coat is at once
better and costs less than the previous one; the tailor is still less
inclined than before to leave his new and greater advantage over the
blacksmith to set himself to shoeing his own horse; even on the old
terms the blacksmith can do that 1 better than he himself can, and
rather than forego the trade he will naturally offer the blacksmith
somewhat better terms than before, or in other words will feel
impelled to share with the blacksmith a part of the proceeds and
rewards of his own now superior skill and diligence. The trade began
on the sole basis of a relative diversity of advantage as between the
two mechanics, each in his own craft; this relative diversity, without
which no exchange ever takes place between any two persons, has now
gone up as between these two from 2 units of advantage to 11 units of
advantage; how will these 11 units be divided in this case? Nobody can
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