170

A TREATISE ON MONEY

BE. Ill

power of Trade Unions or the mere human inclinationto think in terms of money and to feel an increase ofmoney-earnings as a betterment), then in a progress-ive Society where efficiency is increasing it may bebetter to stabilise purchasing power, but in a declin-ing Society where efficiency is decreasing, to stabiliselabour power.

At any rate, some account should be taken of theseconsiderations, based on social expediency and theavoidance of waste and friction, along with considera-tions of social justice, in deciding what it is best to do.

For my own part I am somewhat inclined to think,without having reached a final conclusion, that it ismore important to have a system which avoids, so faras possible, the necessity for induced changes, than itis to attempt to stabilise the price-level according toany precise principle, provided always that the rateof change in the price-level is kept within narrowlimits. At least this is the first thing to do. For theworst of all conceivable systems (apart from the abusesof a fiat money which has lost all its anchors) is onein which the Banking System fails to correct periodicdivergences, first in one direction and then in the other,between Investment and Saving, and where, besides,spontaneous changes in earnings tend upwards, butmonetary changes, due to the relative shortage ofgold, tend downwards, so that, even apart fromfluctuations from the side of Investment and super-imposed upon them, we have a chronic necessity forinduced changes sufficient not only to counteract thespontaneous changes but to reverse them. Yet it ispossible that this is the sort of system which we haveto-day.

This line of thought anticipates much that is tocome. If it is not fully clear, the reader will neverthe-less pick up its drift easily enough if he returns to iton a second reading.