Page:The Economics of Unemployment.djvu/95

is that this short-range expediency ignores the reaction of this compliant policy upon the distribution of the product which is the root cause of depression and unemployment. It can only win a temporary alleviation by sowing the seeds of future trouble. Under existing conditions a depression can only be worked out by a period of low production and low profits in which the reduced product is distributed favourably to labour, unfavourably to capital, so that the rate of saving is temporarily depressed and the insistence of consumers on retaining as much as possible of its normal rate of consumption gradually depletes the congested stocks which have choked the avenues of commerce and checked production.

The policy of wage reduction, raising the proportion of profits to wages, and reducing the proportion of consumption to production, will only lengthen the process of absorbing the congested stocks, in order that the whole movement may begin again.

Another reason for resisting wage reduction is that the adoption of this way of reducing costs of production has always operated to prevent the adoption of better ways. The assertion that high labour costs would ruin trade has been the stock argument of the industrialists against all the wage-advances, shortenings of hours, and legislation for the protection of employees, during the past hundred years. It has consistently been refuted by facts. High wages and other costs of labour have everywhere operated as incentives for employers to discover, adopt and improve other economies, technical and administrative, which have more than offset the higher cost of labour. The refusal