Group Behavior and International Trade

Abstract

! THE primary tool of analysis in economics is the market. But I Walker has expressed the opinion that an economics adequate for prediction and policy must include a theory of extra-market behavior.' Polanyi, further, has attempted to demonstrate that the emphasis on the market is likely to be misleading and that a rounded theory of social behavior would include economic drives as only one stand in a broad web of social motivation.2 The present article is designed to suggest that, in certain situations in international trade, a useful tool of analysis may be found in a theory of group behavior at the national level. Unhappily, no such theory adequate for the task appears to have been developed. A few suggestions will be off ered as to the types of variables with which such a theory should deal. The method followed is to take the world decline in the price of wheat after i870 and to indicate the responses to it in Great Britain, Germany, France, Italy, and Denmark. If a theory of market behavior were sufficient for prediction, it might be expected that the reduction in the price of wheat in Europe would lead to increased imports. Foreign sources of supply would be substituted for domestic. Resources engaged in the