Page:The Economics of Unemployment.djvu/34

retail prices paid for most goods is swallowed up in costs of distribution.

But in focussing our attention upon under-consumption, or the chronic failure of consumption to keep pace with production, it is necessary to define our meaning of consumption. The term is applied in the business world not only to the withdrawal of final commodities for purposes of personal consumption, but to the use of raw materials, fuel and other capital goods which are said to be consumed when they are worked up into other products. Although in periods of general depression both sorts of consumption are reduced, the latter sort is not properly regarded as part of the problem of under-consumption. In this analysis we shall confine the terms consumption and under-consumption to the effective demand of final consumers for finished commodities.

For only thus can we challenge sharply and clearly the accepted economic dogma, which renders it impossible to get a comprehension of the real social economic significance of unemployment. The orthodox economist regards all the opinions and practices, to which we have appealed in support of a belief in a limited market, as based on fallacious thinking. He is convinced that general over-production is impossible, though it stares him in the face at the outbreak of each cyclical depression. Under consumption is for him equally absurd. For does not everything that is produced belong to its producers, who must either want to consume it, or to consume something else against which they can exchange it, or to use it for producing more things which they will consume later