“In this quandary individual producers base illusory hopes on courses of action which would benefit an individual producer or class of producers so long as they were alone in pursuing them, but which benefit no one if everyone pursues them.”

” to restrict the output of a particular primary commodity raises its price, so long as the output of the industries which use this commodity is unrestricted; but if output is restricted all round, then the demand for the primary commodity falls off by just as much as the supply, and no one is further forward.”

” if a particular producer or a particular country cuts wages, then, so long as others do not follow suit, that producer or that country is able to get more of what trade is going. But if wages are cut all round, the purchasing power of the community as a whole is reduced by the same amount as the reduction of costs; and, no one is further forward. “

“Thus neither the restriction of output nor the reduction of wages serves in itself to restore equilibrium. “

“Moreover, even if we were to succeed eventually in re-establishing output at the lower level of money-wages appropriate to (say) the pre-war level of prices, our troubles would not be at an end. For since 1914 an immense burden of bonded debt, both national and international, has been contracted, which is fixed in terms of money. Thus every fall of prices increases the burden of this debt, because it increases the value of the money in which it is fixed. For example, if we were to settle down to the pre-war level of prices, the British National Debt would be nearly 40 per cent. greater than it was in 1924 and double what it was in 1920; the Young Plan would weigh on Germany much more heavily than the Dawes Plan, which it was agreed she could not support; the indebtedness to the United States of her associates in the Great War would represent 40-50 per cent.
more goods and services than at the date when the settlements were made;”

” the obligations of such debtor countries as those of South America and Australia would become insupportable without a reduction of their standard of life for the benefit of their creditors; agriculturists and householders throughout the world, who have borrowed on mortgage, would find themselves the victims of their creditors. In such a situation it must be doubtful whether the necessary adjustments could be made in time to prevent a series of bankruptcies, defaults, and repudiations which would shake the capitalist order to its foundations.”

” Here would be a fertile soil for agitation, seditions, and revolution. It is so already in many quarters of the world.”

” Yet, all the time, the resources of nature and men's devices would be just as fertile and productive as they were. “

“The machine would merely have been jammed as the result of a muddle.”

Posted by pinky at 06:39 PM

“The time which elapses before production ceases and unemployment reaches its maximum is, for several reasons, much longer in the case of the primary products than in the case of manufacture.”

” In most cases the production units are smaller and less well organized amongst themselves for enforcing a process of orderly contraction;”

” the length of the production period, especially in agriculture, is longer;”

” the costs of a temporary shut-down are greater;”

” men are more often their own employers and so submit more readily to a contraction of the income for which they are willing to work;”

” the social problems of throwing men out of employment are greater in more primitive communities;”

” the financial problems of a cessation of production of primary output are more serious in countries where such primary output is almost the whole sustenance of the people.”

” Nevertheless we are fast approaching the phase in which the output of primary producers will be restricted almost as much as that of manufacturers; and this will have a further adverse reaction on manufacturers, since the primary producers will have no purchasing power wherewith to buy manufactured goods;”

“and so on, in a vicious circle. “

Posted by pinky at 06:27 PM