168

A TREATISE ON MONEY

BK. Ill

to the character of the Wages System (including inthis, e.g., the powers and activities of Trade Unions) ,from what we may call the “ induced ” changes arisingfrom the existence of profits or losses due to the CurrencyAuthority permitting or promoting a disparity betweenInvestment and Saving. If the spontaneous changeswhich occur do not suit the Currency Authority, theonly remedy of the latter lies in promoting inducedchanges in an equal and opposite degree.

Since this is a Treatise on Money, and not on theWages System, we shall be more concerned in whatfollows with the close analysis of induced changesthan with that of spontaneous changes. Moreover,whilst it is important to recognise spontaneous changeswhich are incompatible with the currency situation asone of the contingencies which will force the CurrencyAuthority, from time to time, deliberately to upsetthe equilibrium between Investment and Saving, thiscase merges, analytically speaking, into the case—common enough for a country which belongs to anunmanaged international Currency System and onewhich we shall have to examine in considerable detail—where the monetary position forces the CurrencyAuthority to upset the equilibrium between Invest-ment and Saving, not because there has been aspontaneous change in the rates of efficiency-earnings,\ but because the existing level of the latter has ceased(perhaps because of changes abroad) to be compatiblewith the monetary situation. Also, induced changesare likely to be much more important than spontaneouschanges over the short-period—which is anotherreason why in much of what follows we can confineour attention to the former.

In conclusion, it may be well to say a word at thispoint about the bearing of the above on the problemof price-stabilisation.

If we have complete control both of the Earnings(or Wages) System and of the Currency System, so