Page:The Economics of Unemployment.djvu/72

Now what I wish to ask is in what sense this fluctuation, thus induced, can be regarded rightly as inevitable, inherent in the nature of industry. Given a tardy recovery brought about in the way here described, making towards a condition of full employment of the available factors of production, capital and labour, is there any reason why the full employment at high prices, with high profits and high wages, should not continue indefinitely? Only one, viz. a failure to sell at the current high prices the whole supply of final commodities which the whole process of production is capable of putting into the markets. Now it is admitted that all these final commodities could be sold, in the sense that some one possesses the money income capable of buying them, i.e. they belong to someone who can either consume them or exchange them for other consumables which he prefers.^[1] But the fact remains that they cannot find a sufficient number of buyers and consumers, and, therefore, being left unbought, congest the markets and bring down prices, and even at these lower prices cannot get a full market. This congestion operates at once to slow down all the processes of production, and so the world gets once more into a depression.

Now we have noted one significant fact in the process of trade revival which may explain the apparent necessity of over-production and collapse That is the admitted lag of wages. This lag continues throughout the upward process, when with expanding credit and production prices and profits rise. Only when