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ESSAYS IN PERSUASION

PART

II

We have magneto trouble. How, then, canwe start up again? Let us trace events back-wards :—

1. Why are workers and plant unemployed?Because industrialists do not expect to be ableto sell without loss what would be produced ifthey were employed.

2. Why cannot industrialists expect to sellwithout loss? Because prices have fallen morethan costs have fallen—indeed, costs havefallen very little.

3. How can it be that prices have fallenmore than costs? For costs are what a businessman pays out for the production of his com-modity, and prices determine what he gets backwhen he sells it. It is easy to understand howfor an individual business or an individualcommodity these can be unequal. But surelyfor the community as a whole the business menget back the same amount as they pay out, sincewhat the business men pay out in the course ofproduction constitutes the incomes of the publicwhich they pay back to the business men inexchange for the products of the latter? Forthis is what we understand by the normal circleof production, exchange, and consumption.

4. No! Unfortunately this is not so; andhere is the root of the trouble. It is not truethat what the business men pay out as costs ofproduction necessarily comes back to them asthe sale-proceeds of what they produce. It is