Indeed it is precisely because the trade between nations is a purely individual affair, where each trader is left free to follow his own judgment or inclination without outside pressure, that we have all that rushing into and over-crowding of even the most legitimate businesses which is so characteristic of modern trade, - the overbuilding of mills and factories, machine-works, etc., together with all the ups and downs of stock-exchange speculation, over capitalization, gluts, crises, big fortunes, and wide-spread ruin. Whereas, were the trade of a whole nation organized by that nation, as a definite organic unit, under a central representative body, - in the same way as a great American Trust is organized over the whole field of its operations, - no such fluctuations could or would be permitted to occur; and the orthodox economists being under this illusion may well believe that the nation could, if it wished, retain the lion's share of its trade for itself and throw the leavings to its competitor; and so keep the trade between the two, once started, going on without end.

But if we bear in mind that international trade, like the home trade between London and Manchester, is merely the sum-total of a number of trading transactions effected by a number of isolated unrelated individuals, we shall see that there is one thins; that these traders will never consent to do, and that is to let the foreigner keep any industry whatever in which their own instruments of production are superior (and this Mr. Pigou's hypothesis grants to start with); no, not if they drained the rival nation to its last farthing, and the trade between them ceased altogether. And that simply because a nation trading with another nation is not a council of men sitting around a table and deciding which industries shall be pushed and which suppressed, but a number of unrelated individuals merely, each of whom will try and place an order wherever in the world he sees his way to doing it with a profit, however small that profit may be when compared with the profits of other traders in his own nation, in other lines of business enterprise.

Nor will it be found, - as the hypothesis of the orthodox economists assumes, - that the capital of a nation is so rigid and inelastic a thing, that traders will be prevented, for the want of it, from going into the less profitable lines of business as against the foreign competitor, but will leave them to him on the ground that so much capital has been invested in the more profitable trades that there is not enough left to work the less profitable ones as well. For this doctrine is a relic of the old days of the 'wages fund' theory - which indeed was an offshoot from it - but instead of being buried in the same grave with that theory, it still remains to work havoc with all conclusions of the orthodox Political Economy. For at the present day no business need be starved or given over to the foreigner for want of capital, provided always a profit from the investment is a certainty (and this Mr. Pigou's hypothesis assumes); if it does starve it is because it is too speculative, shady, or uncertain.

It will be time, then, to discuss the effects of nations trading with each other as nations, and not as individuals, when Socialism shall have nationalized the instruments of production in each country, but not before; and even then, I apprehend that far from the nation that is superior in every department of competitive industry continuing to trade with the inferior for ever, as the economists imagine, or indeed leaving it anything to trade with, it will, like the American Trusts in the case of private industry, give the inferior nation a very short shrift. For it cannot be too often repeated that it is only in the complementary products of different nations that trade can be kept up between them, never in the competitive ones, which must fight until one or other is extinguished; and the very essence of a complementary trade between nations is not, as the hypothesis with which we are dealing assumes, that one is superior to the other in everything, but only in some things, while inferior in others; and it is the exchange of these complementary products which must keep the trade between the two nations going on indefinitely from age to age.

But the orthodox economists by lumping these two opposite things, - complementary and competitive products, - together, as if they were one and the same, have again exhibited that want of analysis and differentiation which characterizes the infancy of a science, rather than the maturity to which the academical economists, in speaking of themselves as 'a committee of experts,' lay claim. 'He shall be a god to me,' says Plato, 'who can accurately discriminate and define.' And if we ask the reason why the orthodox economists have failed in this analysis, we shall find it in the fact that they have yoked their destiny, as I have shown, to a book, professedly scientific, written over a hundred years ago; and, like Mussulmen expositors of the Koran, have continued to refine on that book ever since in endless subtleties, instead of throwing the whole of this old cargo overboard and beginning anew. For now that Evolution is the watchword of all thought whatever, the age of a scientific author in any branch, except perhaps in Theology or Metaphysics, no longer carries with it the hall-mark of authority, but is rather a presumption of his incompleteness and crudity.

I have not, of course, forgotten that with Mr. Pigou and the orthodox economists, the agency by which, in their perpetual-motion scheme, the trade of two countries, once started, will be kept going on indefinitely, is the passage backwards and forwards of gold affecting the prices of those commodities in which the one nation has a small advantage over the other; but as this brings us back to the effect of the passage of gold in general on prices discussed in the last chaper, my reply is practically the same as that given in that chapter. For if once you allow Mr. Pigou and the orthodox economists to thrust the relative differences in capacity of the instruments of production of two nations into the background, and to ignore the difference between the cheapness caused by the possession of a superior instrument of production, and that which comes from defeat, and from the selling of 'remainders' like a bankrupt's stock, they destroy the living soul of the whole problem; and it is then easy for them to represent the backward and forward passage of gold between nations - by a little tilting of the exchanges at each end alternately, as of dead water in a trough, - as sufficient to keep the currents of trade moving backwards and forwards between them for ever.