ESSAYS IN PERSUASION

PART

138

them, but which benefit no one if every onepursues them. For example, to restrict theoutput of a particular primary commodityraises its price, so long as the output of theindustries which use this commodity is un-restricted; but if output is restricted all round,then the demand for the primary commodityfalls off by just as much as the supply, and noone is further forward. Or again, if a particularproducer or a particular country cuts wages,

then, so long as others do not follow suit, thatproducer or that country is able to get more ofwhat trade is going. But if wages are cut allround, the purchasing power of the communityas a whole is reduced by the same amount asthe reduction of costs; and, again, no one isfurther forward.

Thus neither the restriction of output northe reduction of wages serves in itself to restoreequilibrium.

Moreover, even if we were to succeed eventu-ally in re-establishing output at the lower levelof money-wages appropriate to (say) the pre-war level of prices, our troubles would not beat an end. For since 1914 an immense burdenof bonded debt, both national and international,has been contracted, which is fixed in terms ofmoney. Thus every fall of prices increases theburden of this debt, because it increases thevalue of the money in which it is fixed. Forexample, if we were to settle down to the pre-war level of prices, the British National Debtwould be nearly 40 per cent greater than it was