Prosperity and Depression.pdf

4°2. Nature and Causes of the Cycle Part IIIt may be useful to put the same thing in a slightly differentway. It may happen that, if wages had not been reduced in theparticular industry, employment and output would be smaller inthis hldustry, but the industry, would have disbursed more moneyfor wages, etc., and would have financed this either by borrowingmore from the banks or by refraining from repaying bank loansor from building up moneta~y reserves or by drawing on idlefunds at its disposal (by reducing its liquidity).So far we have analysed the case from the standpointWageof one particular industry, assuming otherreductions things being equal. But, if wage reductions occurin manyindustries.in a number of industries at the same time, or oneafter the other at short intervals, it is still moredifficult to tell what the aggregate result will be.Ifthe primary influences on each industry are such that on balanceno change in MV takes place, the hoardings induced in some'industries being balanced by induced dishoardings 1 in other industries,the net result will be an increase in total employment. Ifthedishoarding in some industries is larger than the hoarding in others,the result will be a still greater increase in employment. But thisneed not necessarily happen. ~n balance, the tendency to hoard1 Some writers have displayed a certain aversion for the wordU hoarding" (e.g., Mr. Kahn in his review of the first edition of this book).Others have obscured'the concept by distinguishing all kinds of newmeanings which the word is alleged to have in the writings of differentwriters without saying who those authors are (see Joan Robinson :II The Concept of Hoarding ", Economic ] out'nal, Vol. XLVIII, June1938, pages 231 to 237). It is difficult to attach any meaning to the statementthat " , hoarding', except in the sense which is covered by theconception of t liquidity preference " has no causal force" (o.P. cit.,page 236). The meaning of " hoarding" which is used here and whichwas defined precisely in Chapt~r 8, § 3, is not the one to which aloneMrs. Robinson attributes " causal force "" But it has certainly causalsignificance in that the decision of individuals to hoard or not to hoard inthis sense is of great importance for future events. How it can be translatedinto Mr. Keynes' terms has been repeatedly indicated. In thepresent context it may help to translate" dishoarding" into" greaterdisbursements ", with the additional condition (carried by the expression" dishoarding ", but not by the word" disbursement") that theincrease in expenditure is an addition to aggregate expenditure of societyas a whole.