CH. 21

THE THEORY OF PRICES

293

One of the objects of the foregoing chapters hasbeen to escape from this double life and to bring thetheory of prices as a whole back to close contact withthe theory of value. The division of Economics be-tween the Theory of Value and Distribution on the onehand and the Theory of Money on the other hand is,I think, a false division. The right dichotomy is, Isuggest, between the Theory of the Individual Industryor Firm and of the rewards and the distribution be-tween different uses of a given quantity of resources onthe one hand, and the Theory of Output and Employ-ment as a whole on the other hand. So long as welimit ourselves to the study of the individual industry orfirm on the assumption that the aggregate quantity ofemployed resources is constant, and, provisionally,that the conditions of other industries or firms are un-changed, it is true that we are not concerned with thesignificant characteristics of money. But as soon aswe pass to the problem of what determines output andemployment as a whole, we require the complete theoryof a Monetary Economy.

Or, perhaps, we might make our line of divisionbetween the theory of stationary equilibrium and thetheory of shifting equilibrium—meaning by the latterthe theory of a system in which changing views aboutthe future are capable of influencing the present situa-tion. For the importance of money essentially flows fromits being a link betzveen the present and the future. Wecan consider what distribution of resources betweendifferent uses will be consistent with equilibrium underthe influence of normal economic motives in a world inwhich our views concerning the future are fixed andreliable in all respects;—with a further division, perhaps,between an economy which is unchanging and onesubject to change, but where all things are foreseenfrom the beginning. Or we can pass from this simpli-fied propaedeutic to the problems of the real world inwhich our previous expectations are liable to disappoint-