56 THE GENERAL THEORY OF EMPLOYMENT BK. II

(ii) We turn, next, to the second of the principlesreferred to above. We have dealt so far with thatpart of the change in the value of the capital equipmentat the end of the period as compared with its value atthe beginning which is due to the voluntary decisionsof the entrepreneur in seeking to maximise his profit.But there may, in addition, be an involuntary loss (orgain) in the value of his capital equipment, occurringfor reasons beyond his control and irrespective of hiscurrent decisions, on account of (e.g .) a change inmarket values, wastage by obsolescence or the merepassage of time, or destruction by catastrophe such aswar or earthquake. Now some part of these involun-tary losses, whilst they are unavoidable, are—broadlyspeaking—not unexpected; such as losses through thelapse of time irrespective of use, and also “normal”obsolescence which, as Professor Pigou expresses it,“is sufficiently regular to be foreseen, if not in detail,at least in the large”, including, we may add, thoselosses to the community as a whole which are sufficientlyregular to be commonly regarded as “insurable risks”.Let us ignore for the moment the fact that the amountof the expected loss depends on when the expectationis assumed to be framed, and let us call the depreciationof the equipment, which is involuntary but not un-expected, i.e. the excess of the expected depreciationover the user cost, the supplementary cost , which will bewritten V. It is, perhaps, hardly necessary to pointout that this definition is not the same as Marshall’sdefinition of supplementary cost, though the under-lying idea, namely, of dealing with that part of theexpected depreciation which does not enter into primecost, is similar.

of which is assumed to be constant) is independent of the number of menemployed in other industries, so that the terms of the above equation, whichhold good for each individual entrepreneur, can be summed for the entre-preneurs as a whole. This means that, if wages are constant and otherfactor costs are a constant proportion of the wages-bill, the aggregate supplyfunction is linear with a slope given by the reciprocal of the money-wage.