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and familiar. For, unless he goes back to the definition,“fluctuations in the real demand for labour” will convey tohis mind the same sort of suggestion as I mean to conveyby “fluctuations in the state of aggregate demand”. But ifwe go back to the definition of the “real demand for labour”,all this loses its plausibility. For we shall find that there isnothing in the world less likely to be subject to sharp short-period swings than this factor.

Professor Pigou ’s “real demand for labour” depends bydefinition on nothing but F(x), which represents the physicalconditions of production in the wage-goods industries, andwhich represents the functional relationship between employ-ment in the wage-goods industries and total employment corre-sponding to any given level of the latter. It is difficult to see areason why either of these functions should change, exceptgradually over a long period. Certainly there seems no reasonto suppose that they are likely to fluctuate during a trade cycle.For F(x) can only change slowly, and, in a technically progres-sive community, only in the forward direction; whilst <f>(x) willremain stable, unless we suppose a sudden outbreak of thrift inthe working classes, or, more generally, a sudden shift in thepropensity to consume. I should expect, therefore, that the realdemand for labour would remain virtually constant throughouta trade cycle. I repeat that Professor Pigou has altogetheromitted from his analysis the unstable factor, namely fluctuationsin the scale of investment, which is most often at the bottomof the phenomenon of fluctuations in employment.

I have criticised at length Professor Pigou’ s theory of un-employment not because he seems to me to be more open tocriticism than other economists of the classical school; butbecause his is the only attempt with which I am acquainted towrite down the classical theory of unemployment precisely.Thus it has been incumbent on me to raise my objections to thistheory in the most formidable presentment in which it hasbeen advanced.