Page:The Economics of Unemployment.djvu/124

and gathered into sale-price is available for purchasing goods, and it is implied, though not explicitly stated, that no other sufficient power of purchase is available. Costs are, it appears, not available as purchase money for two widely different reasons. The money represented in wages, salaries and dividends, paid to the producers of these goods for producing them, have for the most part been spent already by their recipients in purchases for current consumption, before the goods, into whose costs they entered, had reached the retail stores. Only such small fraction of these 'costs,' as has been withheld from current expenditure, is available for purchase of these goods.

The other sort of 'costs,' viz. expenditure on factory account, overhead charges, purchase of raw materials, etc., is not available for another reason. It represents bank credit, advances made by bankers to manufacturers and merchants out of a body of banking credit available only for this work of financing trade, and not for the ultimate purchase of the goods produced. Thus, Major Douglas reaches his conclusion that "the only effective demand of the consumer is a few per cent. of the price-value of commodities."

Now the first and most obvious comment on this analysis is that it proves too much. If it were true that only "a few per cent." of the cost were available for purchase, the entire economic system must speedily be brought almost to a standstill. The recent 20 per cent. of industrial unemployment would be a trifle compared with the situation here envisaged.

But it is quite evident that the effective demand of consumers is not confined to the unspent portion of