8 THE GENERAL THEORY OF EMPLOYMENT BK. I

at the existing money-wage may be satisfied beforeeveryone willing to work at this wage is employed, thissituation is due to an open or tacit agreement amongstworkers not to work for less, and that if labour as awhole would agree to a reduction of money-wages moreemployment would be forthcoming. If this is the case,such unemployment, though apparently involuntary, isnot strictly so, and ought to be included under theabove category of “voluntary” unemployment due tothe effects of collective bargaining, etc.

This calls for two observations, the first of whichrelates to the actual attitude of workers towards realwages and money-wages respectively and is nottheoretically fundamental, but the second of which isfundamental.

Let us assume, for the moment, that labour is notprepared to work for a lower money-wage and that areduction in the existing level of money-wages wouldlead, through strikes or otherwise, to a withdrawal fromthe labour market of labour which is now employed.Does it follow from this that the existing level of realwages accurately measures the marginal disutility oflabour? Not necessarily. For, although a reductionin the existing money-wage would lead to a with-drawal of labour, it does not follow that a fall in thevalue of the existing money-wage in terms of wage-goods would do so, if it were due to a rise in the priceof the latter. In other words, it may be the case thatwithin a certain range the demand of labour is for aminimum money-wage and not for a minimum realwage. The classical school have tacitly assumed thatthis would involve no significant change in their theory.But this is not so. For if the supply of labour is nota function of real wages as its sole variable, their argu-ment breaks down entirely and leaves the question ofwhat the actual employment will be quite indetermin-ate .1 They do not seem to have realised that, unless

1 This point is dealt with in detail in the Appendix to Chapter 19 below.