Page:The Economics of Unemployment.djvu/35

on? The wants of man being expansible without limit, how is it possible that too much can be produced? If he is confronted with the progress of a trade cycle, the full activity in boom years evoking an output which presently becomes so large that it can only be marketed at lower prices—this fall of prices proceeding until a level is reached at which costs of production are no longer covered and surplus stocks of goods are accumulated, which, if thrown upon the market, could only be sold by driving down prices to a still lower level—this economist refuses to recognise this condition as over-production, and confines his attention to the resulting stoppage of industry which he rightly diagnoses as under-production. Now a trade depression manifestly is a state of under-production, but this state is the product of an excessive activity preceding it. Over-production, congestion, stoppage, is the visible order of events. Theoretically, no doubt, it ought not to be possible. Every increase of output ought to find its outlet in consumption without reducing prices below the level at which it pays to produce.

But since it does not work this way, it is well to inquire why it does not. Why does consumption fail to keep pace with increased powers of production? Or, conversely, why do the powers of production increase faster than the rate of consumption?

The answer is found in two related phenomena: first, the conservative character of the arts of consumption, or standards of living, as compared with the modern arts of production; second, the ways in which the current distribution of income confirms this conservatism of consumption.