Page:The Economics of Unemployment.djvu/101

greater. Such is the well-known theory of international trade, operating by division of labour and specialisation. Unfortunately it does not apply where the world-market is so restricted as it is now. For in the trough of such a world depression as prevails at present, the world market for most materials and manufactures has shrunk so much that a single big industrial nation, such as Germany, could absorb so much of it, as to leave very little for countries working at definitely higher costs of production. Where two countries depend so much for the subsistence and employment of their peoples upon the same lines of export trade as Britain and Germany, the issue stands out very sharply. It not only appears to be, but is, to the immediate interest of British trade, and even of the British workers, to lower their standard of wages towards that of the German workers, in order to obtain thereby a larger share of the restricted world-market. It is not a sufficient reply, as we have seen, to urge that lower wages will reduce the internal demand for our products; for that objection is met by showing that an increased volume of employment will mean a larger aggregate of income though the individual worker's income may be less. Nor is the plea for reduction disposed of by urging that the present gap between real wages here and in Germany is so wide that no wage-cuts contemplated here will reduce costs of production near to the German level. For, granted that the general labour costs in Germany are much lower than here, it by no means follows that considerable wage-cuts here would not enable us to get contracts which would otherwise go to Germany,