place or occupation can produce at a less cost than another place or occupation, then there will be a migration of the instruments of production. Since there is no free movement of labor and capital between one country and another, then two countries stand in the same relation as that of two “non-competing groups” within the same country, as before explained. When this fact is once fully grasped, the [pg 393] subject of international values becomes very simple. It does not differ from the question of those domestic values for which we found269 that the dependence on cost of production would not hold, but that their values were governed by reciprocal demand and supply.
Attention should be drawn to the real nature of the present inquiry. It is not here a question as to what causes international trade between two countries: that has been treated in the preceding chapter, and has been found to be a difference in the comparative cost. The question now is one of