276 THE GENERAL THEORY OF EMPLOYMENT bk. v

without re-writing everything that has been written up to thatpoint. Thus if (within limits) it is a money-wage for whichlabour stipulates, we still have insufficient data, even if we assumethat n —x +y, unless we know what determines the money-priceof wage-goods. For, the money-price of wage-goods willdepend on the aggregate amount of employment. Thereforewe cannot say what aggregate employment will be, until weknow the money-price of wage-goods; and we cannot know themoney-price of wage-goods until we know the aggregate amountof employment. We are, as I have said, one equation short.Yet it might be a provisional assumption of a rigidity of money-wages, rather than of real wages, which would bring our theorynearest to the facts. For example, money-wages in GreatBritain during the turmoil and uncertainty and wide pricefluctuations of the decade 1924-1934 were stable within a rangeof 6 per cent., whereas real wages fluctuated by more than 20per cent. A theory cannot claim to be a general theory, unlessit is applicable to the case where (or the range within which)money-wages are fixed, just as much as to any other case.Politicians are entitled to complain that money-wages ought tobe highly flexible; but a theorist must be prepared to deal in-differently with either state of affairs. A scientific theorycannot require the facts to conform to its own assumptions.

When Professor Pigou comes to deal expressly with the effectof a reduction of money-wages, he again, palpably (to my mind),introduces too few data to permit of any definite answer beingobtainable. He begins by rejecting the argument (op. cit.p. 101) that, if marginal prime cost is equal to marginal wage-cost, non-wage-earners’ incomes will be altered, when money-wages are reduced, in the same proportion as wage-earners’, onthe ground that this is only valid, if the quantity of employmentremains unaltered—which is the very point under discussion.But he proceeds on the next page (op. cit. p. 102) to make thesame mistake himself by taking as his assumption that “at theoutset nothing has happened to non-wage-earners’ money-income”, which, as he has just shown, is only valid if the quantityof employment does not remain unaltered—which is the verypoint under discussion. In fact, no answer is possible, unlessother factors are included in our data.

The manner in which the admission, that labour in factstipulates for a given money-wage and not for a given real wage(provided that the real wage does not fall below a certain mini-mum), affects the analysis, can also be shown by pointing out