Economic essays

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Identifikator:: 1753623200

URN:: urn:nbn:de:zbw-retromon-136107

Document type:: Monograph

Title:: Economic essays

Place of publication:: New York

Publisher:: Macmillan

Year of publication:: 1927

Scope:: viii, 368 S.; Ill., graph. Darst.

Digitisation:: 2021

Collection:: Economics Books

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Document type:: Monograph

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Title:: The static state and the technology of economic reform / Thomas Nixon Carver

Collection:: Economics Books

STATIC STATE AND THE TECHNOLOGY OF ECONOMIC REFORM 31 will offer to work for less than the artificially established wage. If they are permitted to do so, they will break the wage scale. If prevented, still worse consequences follow. The mass of unemployed labor creates, for example, what is sometimes called an industrial reserve army, that is, a surplus of unemployed labor which can be employed only in times of extraordinary business activity, or during a business boom. This labor reserve is one of the things that make a business boom possible. Its absence would make a business boom impossible (more of this later). But a business boom is necessarily followed by a period of inaction, and this means an acute condition of unemployment with an acute desire to secure employment on any terms by considerable numbers of men. Only the most drastic procedure can then preserve the artificial wage scale. If there were no industrial reserve army a general business boom would scarcely be possible. It is made possible by the fact that every industry can expand indefinitely without greatly increased cost. So long as each industry can buy increasing quantities of raw materials without raising the price, get increas- ing quantities of working capital without raising the rate of interest, and increasing quantities of labor without raising wages, there is no effective drag to prevent a business boom. We have already had enough experience to show that a rising rate of interest operates as a drag, and our federal reserve system is making good use of this instrument,—a rather ineffective one, it is true, but the best one that is available. It is ineffective because the capital cost is not the principal cost in business expansion. A much more effective drag would operate if wages promptly advanced in a time of potential boom. Wages would promptly advance if there were no industrial reserve army. If that were the situation, then when each and every industry was trying to expand, they would merely be trying to hire laborers away from one another, and this would put such an effective drag on undue expansion as to be prohibitive. But where there is a large industrial reserve army, each and every industry can expand without such advance in wage rates by merely drawing on the labor reserve. Unless other new forms of increasing cost can be found to operate as repressants in time of expansion, these alter- nating periods of employment and unemployment will exist to the general disadvantage of labor. In short, the attempt to raise

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