76. F. Y. Edgeworth to Harrod , 29 May [1924] [a]

[Replies to a letter not found, follows on from 73 ]

All Souls College, Oxford #

29 May [1924] [1]

Dear Harrod

In all applications of reasoning there must be held what Whewell calls the "appropriate idea" [2] and the vulgar the "right end of the stick". This preliminary conception is hardly teachable by mere reasoning and--as in the case of first principles of belief and conduct--<are> who has taken up a position firmly cannot be dislodged by a frontal attack. Of this kind is your assumption that "before trade opens wages and profits per unit agency of standard efficacy are equal in both countries". I on the contrary hold that the essential characteristic of international trade is the inequality of the salary to effort and sacrifice. Thus only do we escape from the Ricardian rut according to which value is proportional to quantity of labour (effort & sacrifice). True enough in domestic trade. But in international exchanges even when <+> [b] it is proper to assume that behind equivalent exchanges there are not the same quantities of effort & sacrifice. The tea which the Chinaman exchanges for English hardware may cost many times more days' labour than what the hardware costs the Englishman. (Vide Cairnes & Mill last section of chapter on International values [3] etc.).

A <fortiori> before the opening of trade we ought not to postulate equality of efficiency (<+> or demand-schedules.) I instanced Dominions dealing with the Mother Country (abstract regions like Mill's "Germany" or "England" in his stupendous chapter [4] ) while Japan and China say, are excluded by a preference. One would conceive their demand curve in respect of international exchange of tropical products for British hardware to be quite different from that of the Dominions. They are willing to give the same--say a unit-- [d] amount of tropical product for much less of British ware than the Domin[ion]s demand <+> [e] when the barrier of preference is removed they cut in and cut out the Dominions. What can be simpler? [f]

I fear that there is not much chance of our reaching agreement by a prolongation of the discussion.

Yours sincerely

F Y Edgeworth

  1. 1. Year not supplied. See note 2 to letter 71 .

    2. William Whewell, The Philosophy of the Inductive Sciences, London: Parker, 1847 (2nd edition), part 2, pp. 18-23.

    3. F. Y. Edgeworth, "Theory of International Values", Economic Journal 4, 1894, pp. 35-50, 424-43 and 605-38. The sections referred to are at pp. 607-19.

    4. J. S. Mill, Principles of Political Economy with Some of Their Applications to Social Philosophy [1848], now as volumes II and III of Collected Works of John Stuart Mill, edited by J. M. Robson, Toronto and London: University of Toronto Press and Routledge, 1965. Reference is to book III, chapter XVIII, §2.

    1. a. ALS, seven pages on two folded sheets, in HP IV-308.

      b. Some illegible words.

      c. Two illegible words.

      d. Ms: the specification was inserted as an afterthought, without the hyphens

      e. Two illegible words.

      f. Ms: the question mark was left out.

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