OUTPUT CAPACITY AND NATIONAL INCOME 17

increased incomes plus £225 million of incomespreviously spent.

That is a modest statement of the problem.Some would say that it is a serious understate-ment, which allows inadequately for the magnitudeof the war effort which will be needed. This maybe true. Moreover, unless we mend our waysquickly, it greatly overstates our rate of output.Nevertheless, to establish my present argumentit is not necessary to go beyond what is alreadyplain. If a greater decrease in consumption provesnecessary, that will reinforce all that I have to say.

Now we can see what the problem is and how itcomes about. Even if there are no increases inwage-rates or in prices, incomes will rise by anamount equal to what is earned in producing theincreased output, namely £825 million a year onthe above assumptions. Yet in spite of theseincreased incomes, those who receive them mustconsume less than before. Whilst earnings willbe increased, consumption must be diminished.That is the conclusion to hammer home. It isbeyond dispute. And it is gradually penetratingto the general consciousness. But we have becomeso accustomed to the problem of unemploymentand of excess resources that it requires someelasticity of mind to adapt our behaviour to theproblem of full employment and of resourceswhich are no longer adequate to supply our needs.In war we move back from the Age of Plenty tothe Age of Scarcity.

Moreover the imminence of the new problemhas been obscured from our eyes by the fact that