CH. II

THE CONDITIONS OF EQUILIBRIUM 157

selected and saves them from the character of beingmere identities.

Under a Socialist system the money - rate ofefficiency-earnings of the Factors of Production mightbe suddenly altered by fiat. Theoretically, I suppose,it might change under a system of competitive indi-vidualism by an act of collective foresight on the partof entrepreneurs in anticipation of impending mone-tary changes, or by a coup de main on the part ofTrade Unions. Practically, as we shall see in a latersection of this chapter, prices may be modified asthe result of a spontaneous change in the actual rateof earnings relatively to efficiency, on account of achange either in the method of fixing wages or in thecoefficient of efficiency. In existing circumstances,however, the most usual and important occasion ofchange will be the action of the entrepreneurs, underthe influence of the actual enjoyment of positive ornegative profits, in increasing or diminishing thevolume of employment which they offer at the exist-ing rates of remuneration of the Factors of Produc-tion, and so bringing about a raising or a lowering ofthese rates. For the departure of profits from zero isthe mainspring of change in the industrial countriesof the modern world outside Kussia. It is by alteringthe rate of profits in particular directions that entre-preneurs can be induced to produce this rather thanthat, and it is by altering the rate of profits ingeneral that they can be induced to modify the aver-age of their offers of remuneration to the factors ofproduction.

Moreover there is a further reason why, in theactual world of to-day, it is appropriate to regard theabove as the normal mechanism of change. For whenthe Central Currency Authority of a country wishesto change the level of money-incomes in the countryand thereby the quantity of circulating money whichthey require, it has no power to order that the money-