Page:The Economics of Unemployment.djvu/87

I have argued that the removal of the wage-lag on rising markets and advancing prices would furnish a substantial check upon over-production, congestion of markets and depression. It will occur to some readers that what holds for the up-grade movement should hold for the down-grade, and that if wages are made to rise in order to keep pace with rising prices, so they should fall with falling prices. This demand, indeed, is treated often as an essential condition for the recovery of trade. Let it, however, be clearly understood that the demand for wage-reduction is not confined to a reduction in money-wages equivalent to the reduction in prices. In depressed trade, with general unemployment, business men have considerable support from economists in calling for cuts in real wages as well as money-wages. The acceptance of lower wages by workers, it is contended, will curb the depression and reduce the volume of unemployment, by lowering costs of production and selling prices so as to enable all businesses adopting the policy to obtain a larger market than they could get otherwise.

Take first the case of businesses, or trades, producing