Page:The Economics of Unemployment.djvu/125

the money producers have received for producing these particular goods. In the very propositions setting out his case, Major Douglas exposes the nature of his error, for he gives as the reason why the bulk of wages, salaries and dividends are not available for purchasing the final goods that they have already been spent upon goods previously produced. And this, of course, is the habitual course of trade. The money available for bringing the commodities which each week flow into the retail stores, to replace those sold last week, is not the money paid for producing these commodities, but that paid for the various processes just performed for producing the commodities that will reach the retail stores next week or next month. Effective demand for commodities proceeds from the wages, salaries and dividends quite recently paid to the producers of these commodities for making their successors. Unless a slump in trade, prices and employment, has intervened (which is not Major Douglas' contention), there is, therefore, no reason why the effective demand of consumers should be insufficient to purchase all the goods produced at a price covering all their costs of production.

But what about the costs which are incurred, not as wages, salaries, and dividends, but "on factory account, overhead charges, purchase of raw materials, etc."? These elements in the final prices are not, it is contended, available as effective demand for those commodities or for any other! Why not? What is the difference between the availability for purchasing commodities of the wages paid to workers in a shoe factory and those paid in a factory for