CH. 4 THE CHOICE OF UNITS 43

geneous unit of labour involves no difficulties unlessthere is great instability in the relative remunerationof different labour-units; and even this difficulty can bedealt with, if it arises, by supposing a rapid liability tochange in the supply of labour and the shape of theaggregate supply function.

It is my belief that much unnecessary perplexitycan be avoided if we limit ourselves strictly to the twounits, money and labour, when we are dealing with thebehaviour of the economic system as a whole; reservingthe use of units of particular outputs and equipmentsto the occasions when we are analysing the output ofindividual firms or industries in isolation; and the useof vague concepts, such as the quantity of output as awhole, the quantity of capital equipment as a wholeand the general level of prices, to the occasions whenwe are attempting some historical comparison whichis within certain(perhaps fairly wide) limits avowedlyunprecise and approximate.

employed for a given purpose is always rewarded with strict regard to itsefficiency for that purpose. But this is unrealistic. Perhaps the essentialreason for treating the varying efficiency of labour as though it belongedto the equipment lies in the fact that the increasing surpluses, which emergeas output is increased, accrue in practice mainly to the owners of the equip-ment and not to the more efficient workers(though these may get an ad-vantage through being employed more regularly and by receiving earlierpromotion); that is to say, men of differing efficiency working at the samejob are seldom paid at rates closely proportional to their efficiencies. Where,however, increased pay for higher efficiency occurs, and in so far as it occurs,my method takes account of it; since in calculating the number of labourunits employed, the individual workers are weighted in proportion to theirremuneration. On my assumptions interesting complications obviouslyarise where we are dealing with particular supply curves since their shapewill depend on the demand for suitable labour in other directions. Toignore these complications would, as I have said, be unrealistic. But weneed not consider them when we are dealing with employment as a whole,provided we assume that a given volume of effective demand has a particulardistribution of this demand between different products uniquely associatedwith it. It may be, however, that this would not hold good irrespectiveof the particular cause of the change in demand. E.g. an increase ineffective demand due to an increased propensity to consume might finditself faced by a different aggregate supply function from that which wouldface an equal increase in demand due to an increased inducement to invest.All this, however, belongs to the detailed analysis of the general ideas hereset forth, which it is no part of my immediate purpose to pursue.