CH. I9

CHANGES IN MONEY-WAGES

267

immoderate increase may offset its other advantagesby its disturbing effect on confidence; so a moderatereduction in money-wages may prove inadequate,whilst an immoderate reduction might shatter con-fidence even if it were practicable.

There is, therefore, no ground for the belief that aflexible wage policy is capable of maintaining a state ofcontinuous full employment;—any more than for thebelief than an open-market monetary policy is capable,unaided, of achieving this result. The economicsystem cannot be made self-adjusting along theselines.

If, indeed, labour were always in a position to takeaction (and were to do so), whenever there was less thanfull employment, to reduce its money demands byconcerted action to whatever point was required to makemoney so abundant relatively to the wage-unit that therate of interest would fall to a level compatible with fullemployment, we should, in effect, have monetarymanagement by the Trade Unions , aimed at full em-ployment, instead of by the banking system.

Nevertheless while a flexible wage policy and aflexible money policy come, analytically, to the samething, inasmuch as they are alternative means of chan-ging the quantity of money in terms of wage-units, inother respects there is, of course, a world of differencebetween them. Let me briefly recall to the reader’smind the three outstanding considerations.

(i) Except in a socialised community where wage-policy is settled by decree, there is no means of securinguniform wage reductions for every class of labour. Theresult can only be brought about by a series of gradual,irregular changes, justifiable on no criterion of socialjustice or economic expediency, and probably com-pleted only after wasteful and disastrous struggles,where those in the weakest bargaining position willsuffer relatively to the rest. A change in the quantityof money, on the other hand, is already within the