268 THE GENERAL THEORY OF EMPLOYMENT bk. v

power of most governments by open-market policy oranalogous measures. Having regard to human natureand our institutions, it can only be a foolish person whowould prefer a flexible wage policy to a flexible moneypolicy, unless he can point to advantages from theformer which are not obtainable from the latter. More-over, other things being equal, a method which it iscomparatively easy to apply should be deemed prefer-able to a method which is probably so difficult as to beimpracticable.

(ii) If money-wages are inflexible, such changes inprices as occur (i.e. apart from “administered ” ormonopoly prices which are determined by other con-siderations besides marginal cost) will mainly correspondto the diminishing marginal productivity of the existingequipment as the output from it is increased. Thusthe greatest practicable fairness will be maintainedbetween labour and the factors whose remuneration iscontractually fixed in terms of money, in particular therentier class and persons with fixed salaries on thepermanent establishment of a firm, an institution or theState. If important classes are to have their remunera-tion fixed in terms of money in any case, social justiceand social expediency are best served if the remunera-tions of all factors are somewhat inflexible in terms ofmoney. Having regard to the large groups of incomeswhich are comparatively inflexible in terms of money, itcan only be an unjust person who would prefer a flexiblewage policy to a flexible money policy, unless he canpoint to advantages from the former which are notobtainable from the latter.

(iii) The method of increasing the quantity ofmoney in terms of wage-units by decreasing the wage-unit increases proportionately the burden of debt;whereas the method of producing the same result byincreasing the quantity of money whilst leaving thewage-unit unchanged has the opposite effect. Havingregard to the excessive burden of many types of debt,