236 THE GENERAL THEORY OF EMPLOYMENT bk. iv

which has been traditionally supposed to render goldespecially suitable for use as the standard of value,namely, its inelasticity of supply, turns out to be pre-cisely the characteristic which is at the bottom of thetrouble.

Our conclusion can be stated in the most generalform (taking the propensity to consume as given) asfollows. No further increase in the rate of investmentis possible when the greatest amongst the own-ratesof own-interest of all available assets is equal to thegreatest amongst the marginal efficiencies of all assets,measured in terms of the asset whose own-rate of own-interest is greatest.

In a position of full employment this condition isnecessarily satisfied. But it may also be satisfied beforefull employment is reached, if there exists some asset,having zero (or relatively small) elasticities of produc-tion and substitution , 1 whose rate of interest declinesmore slowly, as output increases, than the marginalefficiencies of capital-assets measured in terms of it.

IV

We have shown above that for a commodity to bethe standard of value is not a sufficient condition forthat commodity’s rate of interest to be the significantrate of interest. It is, however, interesting to considerhow far those characteristics of money as we know it,which make the money-rate of interest the significantrate, are bound up with money being the standard inwhich debts and wages are usually fixed. The matterrequires consideration under two aspects.

In the first place, the fact that contracts are fixed,and wages are usually somewhat stable, in terms ofmoney unquestionably plays a large part in attractingto money so high a liquidity-premium. The conveni-

1 A zero elasticity is a more stringent condition than is necessarily required.