The following is from a book published in 1929 by a "P. W. Martin."
I invite comparison to Keynes' supposedly original work published seven years later. -- P. W. Martin, *Unemployment and Purchasing Power*, 1929. (Fondren Library, Rice) FORWARD This essay puts out in brief the main arguments and findings of a more detailed study at present in course of preparation. It deals with what is essentially a technical question-the relation between unemployment and monetary policy--but one which is at the same time a matter of vital importance to the community at large. I have published it in the belief that there are not merely a few but many thousands of men and women, in all walks of life, who are willing to do a good deal of hard thinking to get to the bottom of the apparent shortage of purchasing power and accompanying unemployment that have darkened the industrial history of the last few years. It is to them, fully as much as to the economic and financial specialist, that the ensuring pages are addressed. p. 9-12 Some century and a quarter ago a French economist, Jean-Baptiste Say, published a *Treatise of Political Economy*. In this work he laid down the doctrine that although here and there a particular trade or industry might outrun its market, it was impossible to have an over-production of goods in general... This doctrine that over-production of goods in general cannot occur has been adopted by successive generations of economists, and is now accepted a quasi-axiomatic... With so much depending upon its validity Say's argument demands rather closer examination. One point about it is evident. Say is not dealing with anything closely resembling the present-day industrial world. We, as individuals, do not in literal fact make goods and then sell them to other individuals. What we do for the most part (the more fortunate of us) is to work for some business firm or factory, receive wages, salaries, and so forth, in return, and use these wages and salaries to buy the goods thus made. This brings in two important features which Say's highly simplified system ignores. The first is that with the great majority of us, unless we can find some firm or factory to employ us we are unable to produce. In Say's world such unemployment is a thing unknown--everyone simply goes ahead and produces independently. The second feature is that, in the present-day industrial world, unless a factory can continue to sell its goods at remunerative prices, i.e. at prices covering total costs incurred, it sooner or later goes out of business. Say makes no allowance for any such contingency... On top of this there are a number of other complications with which Say does not deal in his demonstration that all-round over-production cannot occur. In particular there is the whole intricate question of bank credit--Say's world, it may be noticed, is innocent of banks. It is true that, in spite of all this, the conclusion he reaches may still be sound. But without further investigation we should certainly not be justified in placing implicit faith in an analysis of a situation so far removed from anything corresponding to presentday conditions. If Say's theory fitted in fairly well with actual experience there would be less reason to doubt its substantial accuracy. But in point of fact, of course, it runs definitely counter to experience... p. 70-71 ...The first of these difficulties, the problem of determining when a deficiency of purchasing power is imminent and the approximate extent of such deficiency, is essentially a technical one. For present purposes, a pronounced rise in the unemployment percentage accompanied by a decline in the commodity price level, provided that such movements were not attributable to some purely fortuitous circumstance, might be taken as sufficient evidence that purchasing power was inadequate. To bring about an influx of new purchasing power in such a way as to offset this deficiency without risk of inflation, some measure of co-operation between the Government and the banking system is required. a possible line of action consists in what might be termed the'special financing of public works.' Upon the approach of a general deficiency of purchasing power, as indicated by a rising unemployment percentage and a decline in the commodity price level, the Government would borrow from the banks to such extent--£20 million, say--as might be judged necessary to offset the deficiency of purchasing power beginning to make itself felt. At the same time, the Bank of England, by buying securities (having recourse, if necessary, to some increase in the fiduciary issue, as provided in the Currency and Bank Notes Act) would made available the necessary cash basis for this increase in deposit currency. The new purchasing power thus obtained, would be used by the Government to put on foot a previously established programme of public works. By this means an *absolute* increase in purchasing power would be brought about. For the purchasing power paid away by the Government in the construction of arterial roads, etc., would be used by the recipients almost entirely to buy goods, while the arterial roads, etc, themselves would not, of course, come upon the market for sale. In this way, therefore, the incipient deficiency of purchasing power could be offset... p. 73 The special financing of public works does not call for any revolutionary change in the monetary system. The control by the central bank continues. The part played by the banking system in meeting the legitimate claims of business for accommodation remains unaltered. The only difference is that in the event of purchasing power tending to become deficient the Government, supported by the central bank, would take steps to offset this deficiency... p. 83 By this means the required *absolute* increase in purchasing power would be effected-a procedure differing fimdamentally from the use of taxes, etc., to finance public works, which merely results in a transfer of purchasing power from one group of individuals to another, and does nothing to make good a deficiency of purchasing power... -- _____________________________________________________________ Get 25MB, POP3, Spam Filtering with LYCOS MAIL PLUS for $19.95/year. http://login.mail.lycos.com/brandPage.shtml?pageId=plus&ref=lmtplus ==^================================================================ This email was sent to: archive@mail-archive.com EASY UNSUBSCRIBE click here: http://topica.com/u/?a84IaC.bcVIgP.YXJjaGl2 Or send an email to: [EMAIL PROTECTED] TOPICA - Start your own email discussion group. 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