Solutions for Unemployment
Lapses from Full Employment. By Professor A. C. Pigou. (Macmillan 4s. 6d.)
PROFESSOR PIGOU's preface states that he is broadly in sympathy with the White Paper on Unemployment Policy. The succeeding chapters demonstrate that the objectives of that White Paper will not be easy to realise. They contain in brief and convenient form the economic analysis necessary to diagnose the difficulties and the dangers. " Full employment " is defined as the absence, at ruling rates of wages, of anyone who wishes to be employed. The emphasis throughout is upon the wills of those who have to negotiate contracts for wages, and the wills of those who have the responsibility for employing wage-earners successfully and continuously at those wage rates. The possible economic consecniences, under a variety of different circum- stances, of the interplay of these opposing wills, are clearly expounded. The exposition reveals the writer's concern lest the weakening of the fear of heavy unemployment as, directly, a moderating influence upon those who negotiate wages contracts, and, indirectly, under the conditions postulated by the White Paper pro- posals, upon those who have to employ labour, may defeat full em- ployment policies unless the latter are accompanied by increasing doses of inflation. " A moderate inflationary tendency, if it enabled employment to be kept at a low level, would be well worth enduring." But as those responsible for negotiating, and for fixing with trades bcards, the level of many wages are not also concerned with the total volume of employment, their demands may lead to galloping with runaway inflation. This general conclusion is reached without reference to the particular dependence of the United Kingdom upon supplies imported from overseas. The writer concludes that his is not a popular theme, and therefore one which the academic economist has a particular duty to insist. His book is a cogent and lucid plea for moderation, and for the avoidance of economic dogmatism. It is also a demonstration in handy form of the way in which the main body of economic thought has been advanced and unified in the past twenty-five years.
In the early chapters is an explanation of the reasons that have led the overwhelming majority of economists to abandon the classical solution to the problem of unemployment, which sought to equate the demand for and the supply of labour by the simple remedy of reducing money rates of wages. The modern approach to the problem, conveniently associated with the name of Lord Keynes, is explained in a page and a-half, and the particular difficulties to which the new approach may give rise are examined. Few economists would differ from the analysis of these matters. Differences of opinion will arise in estimating the social and political dangers which are inherent in them. In late chapters the economic effects of seeking to secure full employment by transferring labour from centres of high unemployment to other areas are set out, as are the consequences of seeking to influence the sum total of employment by playing upon inequalities of wages. Inevitably these matters require the inclusion of some passages which the general reader, for whom the book is intended, will find stiff reading. But these are kept to a most modest length, and the prints as they are established are conveniently summarised. The close study which they require are assisted by the skill with which the makers of the book have set at the author's material on its seventy-three well-printed and conveniently spaced
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