Page:The Economics of Unemployment.djvu/126

making shoe machinery, to replace the machines gradually worn out in the shoe factory? So with all the other money paid in overhead charges, raw material, etc. There is no difference in the availability of these costs and the other costs, as effective demand for commodities.

Misunderstanding sometimes arises from the tendency to visualise productive effort as directed to three ends, the production of commodities, work of repair and replacement of capital goods, production of more capital goods. Now when production is properly realised, not as a single act or set of acts, but as a continuous process, the second of these ends (repair and replacement) simply disappears, i.e. is swallowed up in production of commodities, and the payments made on its behalf are available as effective demand for commodities, though not of the particular series of commodities into which they entered as costs.

Perhaps this is best realised by visualising production as a constant rapid flow of raw materials from the extractive processes of agriculture, mining, etc., through various stages of transport, manufacture and distribution, assisted at the several stages by plant, fuel and other capital goods which flow as tributaries into the main stream, being worked up into the final commodities and forming costs of production on a par with the other costs, wages, salaries and interest, in the main flow of production. The net income of the commodity will consist of wages, salaries and interest paid in all these productive processes, whether conducted on the main stream or along the tributaries. All this income is available for effective demand of