10 THE GENERAL THEORY OF EMPLOYMENT BK. I

changes in money-wages and changes in real wages.In the case of a change peculiar to a particular industryone would expect the change in real wages to be in thesame direction as the change in money-wages. Butin the case of changes in the general level of wages, itwill be found, I think, that the change in real wagesassociated with a change in money-wages, so far frombeing usually in the same direction, is almost always inthe opposite direction. When money-wages are rising,that is to say, it will be found that real wages are falling;and when money-wages are falling, real wages arerising. This is because, in the short period, fallingmoney-wages and rising real wages are each, forindependent reasons, likely to accompany decreasingemployment; labour being readier to accept wage-cutswhen employment is falling off, yet real wages in-evitably rising in the same circumstances on account ofthe increasing marginal return to a given capitalequipment when output is diminished.

If, indeed, it were true that the existing real wageis a minimum below which more labour than is nowemployed will not be forthcoming in any circumstances,involuntary unemployment, apart from frictional un-employment, would be non-existent. But to supposethat this is invariably the case would be absurd. Formore labour than is at present employed is usuallyavailable at the existing money-wage, even though theprice of wage-goods is rising and, consequently, thereal wage falling. If this is true, the wage-goods equi-valent of the existing money-wage is not an accurateindication of the marginal disutility of labour, and thesecond postulate does not hold good.

But there is a more fundamental objection. Thesecond postulate flows from the idea that the real wagesof labour depend on the wage bargains which labourmakes with the entrepreneurs. It is admitted, of course,that the bargains are actually made in terms of money,and even that the real wages acceptable to labour are