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CH. 17 PROPERTIES OF INTEREST AND MONEY

favour of stability of employment. Moreover, thereis also the difficulty that wage-goods have a high carry-ing-cost. If, indeed, some attempt were made tostabilise real wages by fixing wages in terms of wage-goods, the effect could only be to cause a violent oscilla-tion of money-prices. For every small fluctuation inthe propensity to consume and the inducement to investwould cause money-prices to rush violently betweenzero and infinity. That money-wages should be morestable than real wages is a condition of the systempossessing inherent stability.

Thus the attribution of relative stability to realwages is not merely a mistake in fact and experience.It is also a mistake in logic, if we are supposing that thesystem in view is stable, in the sense that small changesin the propensity to consume and the inducement toinvest do not produce violent effects on prices.

v

As a footnote to the above, it may be worth emphas-ising what has been already stated above, namely, that“liquidity” and “carrying-costs” are both a matter ofdegree; and that it is only in having the former highrelatively to the latter that the peculiarity of “money”consists.

Consider, for example, an economy in which thereis no asset for which the liquidity-premium is alwaysin excess of the carrying-costs; which is the bestdefinition I can give of a so-called “non-monetary”economy. There exists nothing, that is to say, butparticular consumables and particular capital equip-ments more or less differentiated according to the char-acter of the consumables which they can yield up, orassist to yield up, over a greater or a shorter period oftime; all of which, unlike cash, deteriorate or involveexpense, if they are kept in stock, to a value in excessof any liquidity-premium which may attach to them.