CH. 2 POSTULATES OF THE CLASSICAL ECONOMICS 15

wage below the marginal disutility of the existingvolume of employment. Every trade union will putup some resistance to a cut in money-wages, howeversmall. But since no trade union would dream of strik-ing on every occasion of a rise in the cost of living, theydo not raise the obstacle to any increase in aggregateemployment which is attributed to them by the classicalschool.

IV

We must now define the third category of unem-ployment, namely “involuntary” unemployment inthe strict sense, the possibility of which the classicaltheory does not admit.

Clearly we do not mean by “involuntary” unem-ployment the mere existence of an unexhausted capacityto work. An eight-hour day does not constitute un-employment because it is not beyond human capacityto work ten hours. Nor should we regard as “involun-tary” unemployment the withdrawal of their labour bya body of workers because they do not choose towork for less than a certain real reward. Further-more, it will be convenient to exclude “frictional”unemployment from our definition of “involuntary” un-employment. My definition is, therefore, as follows:Men are involuntarily unemployed if, in the event of asmall rise in the price of wage-goods relatively to the money-wage, both the aggregate supply of labour willing to workfor the current money-wage and the aggregate demandfor it at that wage would be greater than the existingvolume of employment. An alternative definition, whichamounts, however, to the same thing, will be given inthe next chapter (p. 26 below).

It follows from this definition that the equality ofthe real wage to the marginal disutility of employmentpresupposed by the second postulate, realistically inter-preted, corresponds to the absence of “involuntary”unemployment. This state of affairs we shall describe