20

HOW TO PAY FOR THE WAR

CHAPTER IV

CAN THE RICH PAY FOR THE WAR?

We have shown that, quite apart from war in-creases in rates of wages, the earnings of thecountry as a whole should increase by as muchas £825 million merely as a result of the increasein output and employment. At the same timeprivate consumption will have to diminish by atleast £175 miUion, taking a moderate estimate.Thus altogether £1,000 million of private incomesmust be withdrawn from consumption. Thisfigure has been reached on the basis of pre-warwages and prices. Since significant rises in thesehave already occurred, all our figures should besomewhat increased in terms of present pricesand wages. By the end of January 1940, whole-sale prices had risen by 27 per cent, the cost ofliving (seasonally corrected) by 10 per cent, andwages by perhaps 5 per cent; which means thatthe aggregates I am using should be increased bynearly 10 per cent to conform to the wage andprice levels current at that date.

I have heard it argued that, whilst these figuresmay be correct, they do not prove that the work-ing class need be asked to make any sacrifice.Admittedly they will work harder. But if so theirconsumption must be increased proportionately.If the cost of living rises, wage-rates, and notmerely total earnings, must be increased to the