Labour¾

Pigou's real demand function for, 272-3 , 275 , 278-9

elasticity of demand for, 258-9

disutility of; 6 , 128 , 245

marginal disutility of, 5 , 28 , 128 , 284 , 291

as sole factor of production, 213-15

and future of interest, 375

international division of, 333 , 338 , 381

and production of money, 230-2

marginal product of, 5 , 83 , 257

supply of¾not function of real wage only, 8 ; and trade cycle, 326

Labour Government and enterprise, 162

Laffenas, Les Trésors et richesses pour mettre l'Estat en Splendeur, 358

Laissez-faire¾

and employment, 217-20

and foreign trade, 335 , 339 , 348

and investment, 159

and Mercantilism, 348 , 350

and money, 129 , 235

and wage policy, 269

and war, 348 , 381-2

Gesell on, 355

compared to money by Locke, 343

nationalisation, 355 n , 358

Liquid capital goods, see Capital and Stocks

Liquidity¾

Incentives to, 194-209

its nature, 240-1

attitude to it an ultimate variable, 247-8

and the propensity to consume, 108

and 'sound finance', 155 , 159-60

and money-rate of interest, 234-5

and land, 241-2

in non-monetary economy, 240

and individual saving, 212-13

and wage-unit, 232

and growth of wealth in India, 337

and carrying-costs, 233-4 , 237

and quantity of money, 241 n , 305

defined, 168

its shape, 171-2

its nature, 197-200 , 205

in crises, 207

and employment, 248-9

and quantity theory of money, 208-9

and quantity of money, 298

and money-wages, 172 , 263-4

defined, 166 , 168

and rate of interest, 166-74 , 180-1 , 207

its three divisions, 170

transactions-motive, defined, 170 , 170-2 , 174 , 182 ;
reclassified, 195

precautionary-motive, defined, 170 , 170-2 , 196

speculative-motive, defined, 170 , 170-4

income-motive, defined, 195

business-motive, defined, 195-6

and expectation, 169

and hoarding, 174

and foreign investment, 336

and public works, 120

and the trade cycle, 313 , 316 , 328

measured in wage-units, 172

and wealth in Middle Ages, 351

in long period, 306

in nineteenth century, 308

to-day, 309

and Gesell's theory, 356

and Locke on Interest, 343

and Mercantilist thought, 341 , 344

and Ricardo on Interest, 191

in Treatise on Money, 173-4

Liquidity-premium

defined, 226

of money and other assets, 227-9

of money, 233 n

of money and Gesell's theory, 357-8

of land, 241-2

of standard of value, 237-40

Local authorities, sinking funds of, 101

Locke, J., 344 n

A Letter to a Friend concerning Usury, 344

Some Considerations of the Consequences of the Lowering of Interest and Raising the Value of Money, 342 and n, 343

Long-period cost, and user cost, 68-9

Long period, price-level in, with stable wage policy, 270-1

Long-term bonds, and liquidity-premium on land, 241

and change in wage-unit, 263

regulation of price of, by central bank, 206

Loss, windfall, defined, 57-8 , 228

Top

M

Maintenance, and user cost, 66 , 69-70

Malthus, T. R., on effective demand, 32 , 362-4 , 369 , 371

Principles of Political Economy, 363

Letter from Ricardo, 43

Letters to Ricardo, 362-3

Management and ownership, separation of, 150-1 , 153

Management, monetary, see Monetary policy

'Manchester System', 379

Mandeville, Bernard, 371

Fable of the Bees, 106 , 359-62

disutility of employment of labour, see Labour

efficiency of capital, see Capital, marginal efficiency of

factor cost, see Factor cost

multiplier, see Multiplier

proceeds, see Proceeds

product of labour, see Labour

productivity, see Productivity

propensity to consume, see Consume, marginal propensity to

User cost, see User cost

Wage cost, see Wage cost

(and Mary), Economics of Industry, 19 n , 20 n , 21

Industry and Trade, 334 n

Money Credit and Commerce, 334 n

Pure Theory of Domestic Values, 19

Principles of Economics, 72 , 139-40 , 175-6 , 186-90 , 214 n , 242 , 334 n

Mathematical economics, 275 , 297-8

Mercantilism, 334-51 , 358-9

Midas, the fate of, analogy of, 219

Mill, J. S., 3 n , 19-20

Principles of Political Economy, 18 , 364 n

Misselden, Edward, Free Trade, or the Meanes to make Trade Florish, 342

Monetary economy, non-, see Non-monetary economy

Monetary policy, the future of, 378

and rate of interest, 164 , 202-8

and rate of interest in classical theory, 243-4

and liquidity, 196-9

and production of money, 230 , 235

and saving and investment, 84

and the trade cycle, 316-17

and balance of trade, 337-9

and wages, 267-9

Hume on, 343 n

its essential properties, 222-44 , 293

its position in the economic systern, 173 , 292-4

and debts, 167 n

its carrying costs, 225-7 , 233-4 , 238

the demand for, 84 , 194-5 , 248-9 , 263-4

its elasticity of production, 230-1 , 234-6 , 238

its elasticity of substitution, 231 , 234 , 238

and rate of interest, 166-74

in Mercantilist thought, 340-1 , 345-7 , 358-9

Money, income-velocity of, defined, 201 ; 194-5 , 209 , 258 , 289 , 299 , 304

Money, quantity of

an ultimate variable, 247-8

and bond prices, 200

and employment, 171 , 173

and hoarding, 174

and rate of interest, 167-8 , 171-4 , 205 , 233

and liquidity, 196-9 , 241 n

and the price-level, 173 , 295-9 , 303-9

and quantity theory, 209 , 304-6

and rentiers, 290

and saving and investment, 79-85

and money-wages, 171 , 173 , 258 , 266-70

in Mercantilist thought, 340-1 , 345-7 , 358-9

Hume on, 343 n

Locke on, 342-4

restated, 285 , 295-6 , 305-6

and liquidity, 208-9

and full employment, 289

Locke's theory, 343-4

Money, velocity of circulation of, Locke on, 343

Money-wages, see Wage-unit and Wages, money

Monopoly prices, 268-70

Mortgages, 241

Multiplier, 113-31

in Great Britain, 122

in the United States, 122 , 127-8

and stability, 250-2

Pigou's rejection of, 277

Kahn on, 113-15 , 119

Multiplier, the investment

defined, 115 ; 127 , 248

and the quantity of money, 298-9

Mummery, A. F., 364-70

Mun, Thomas, 344

Top

N

National Debt, 264

National Dividend, 5 n , 379 , see also Income

'Natural forces', see Laissez-faire

'Natural' tendencies not a law of necessity, 254

'Natural' rate of interest, see Interest, rate of

Neo-classical School, 177

Net investment, see Investment, net ; Saving, see Saving, net

'Neutral' rate of interest, 183 , see Interest, rate of

New Deal,

and enterprise, 162

and stocks, 331-2

Non-monetary economy, a definition of, 239 ; 222

Non-static economy, 99 , 146 , 293

Normal cost, 70-1

Normal profit, 72

in the Treatise on Money, 77

Top

O

Open-market operations, 197-9 , 267-8

Open system¾

in classical theory of wages, 11

and the multiplier, 120

and reduction of wages, 262-3

and wage policy, 270 , 301

of classical theory, 33

and economic activity, 161

and the trade cycle, 316

as a whole, 17 , 43 , 67 ; its place in economics, 293-4

stability of money-cost of, 237-8

diminishing returns of, 91-2 , 300 , 302 , 328

and full employment, 289

and true inflation, 303

limit to, set by rate of interest, 229

and liquidity, 195-6

and change in quantity of money, 298

and saving and investment, 77-8

and State control, 378

ordinary supply curve and, 281

supply price of, 300 , 328

and the trade cycle, 325-6 , 328-9 , 331-2

and wage-unit, 269

See also Income

Output, elasticity of, defined, 282-3 , see Production, elasticity of

Overdrafts, 196

Over-investment, 320-4 , 370

Over-saving, Hobson on, 365-70

Ownership and management, the separation of, 150-1 , 153

Own-rate of interest, see Interest, own-rate of

Top

P

Period of production, 76 , 214-17

defined, 287

Pigou, A. C., 3 n , 19 , 32 , 56 , 59 , 142 , 186 , 238

Economics of Welfare, 5 n , 38 , 39 , 188 , 190

Industrial Fluctuations, 189-90

Theory of Unemployment, 7 , 13 , 72 , 190 , 260 ,
272-9

the multiplier in, 125-6

Population changes¾

in the nineteenth century, 307

and length of trade cycle, 318

and stock of money, 340 n

and war, 381

Precious metals¾

and mercantilism, 333 , 334 n , 335-8 , 344 , 347

and stamped money, 338

and the gold standard, 348-9

the theory of, 292-309

and changes in employment, 173 , 249 , 253

and full employment, 118 , 289 , 291

and public works, 117

and quantity theory of money, 209 , 304-5

and the trade cycle, 328 , 330

and changes in money-wages, 12 , 239 , 252-3 , 262-4 , 266 , 269-74 , 306-9

the concept criticised, 37 , 39-40 , 43

and 'natural rate' of interest, 242

stability of, 64 , 239 , 250-3 , 270-1 , 288-9

See also Prices

elasticity of expected, in response to changes in effective demand,
defined, 284-5

elasticity of, in response to changes in quantity of money, defined, 305 ; 296

Prices, monopoly, 268 , 270

Prime cost¾

defined, 53

and quantity theory of money, 305

and user cost, 68-9

Prime cost, average, 68

Prime cost, marginal¾

and employment function, 283

and user cost, 68

and changes in money-wages, 262 , 266

and wage-cost, 272-3 , 299-300 , 302

and Pigou's Theory of Unemployment, 272-3 , 276

and uncertainty, 148 n

and stock-exchange valuations, 152

and liquidity, 240

defined, 24 ; 25 , 55 , 77 , 89 , 290

and user cost, 66-7 , 70

marginal, 55 , 70

See also Income

preliminary definition of, 230

defined, 282-3

and employment function, 282-5

and properties of money, 230-1 , 234-6 , 238

and quantity theory of money, 300 , 304-6

labour as the sole, 213-15

Mercantilists and money as, 341

defined, 287

and yield from capital, 213-17

Profit¾

and employment function, 283 , 289-90

and over-saving, Hobson on, 369-70

Profit, net, of entrepreneurs, see Income, net, of entrepreneurs defined, 57

discussed, 56-8 , 59 , 92

and user cost, 68-9

in the Treatise on Money, 77

Propensity to consume, to hoard, to save, see Consume, propensity to ;
    Hoard, propensity to ; Save, propensity to

Prospective yield, see Yield

Protection, 334-5

Provision, financial, see Supplementary cost

Psychological factors¾

the ultimate, 246-7

and stability, 250-4

Psychology, mass, of investors, 154-5 , 159 , 172 , 317

Public works, 116 , 119 , 127

Pye, Philip, 354

Pyramids, building of, 131 , 220

Top

Q

Quantity of money, see Money, quantity of

Quantity theory of money, see Money, quantity theory of

Quasi-stationary conditions, 220-1

Top

R

Rate of discount, 135 , 224

Rate of interest, see Interest, rate of

Rate of time-discounting, changes in, 93-4

Real demand schedule for labour, see Labour

Real income, see Income

Real wages, see Wages

Rent, compared to Interest, by Locke, 343

Rent factors¾

and money, 231

and elasticity of employment, 288

future of, 221 , 376

and full employment, 290

and reduction of money-wages, 262

defined, 135

and marginal efficiency of capital, 135

and trade cycle, 321 , 323-4

and user cost, 71

and Douglas' theory, 371

Ricardo, 3 n , 4 n , 5 n , 18 , 32 , 186 , 190-2 , 244 , 340 , 367 , 369

Letters from Malthus to, 362 , 363

Principles of Political Economy, 190-2

three types of, 144-5

and accumulation, 348 , 351

and future of capitalism, 221 , 375

and inequality of incomes, 372

to-day, 309

the monetary authority and debts of different degrees of, 205-6

and a low rate of interest, 208

moral, 144-5 , 208 , 309

Risk, entrepreneur's, 144-5

Risk, lender's, 144-5

Risk-premium and liquidity premium, 240

Robbins, L., 30 n , 79 , 192

Robertson, D. H., 78 , 79 n , 143 n , 180 n , 187 n , 327

Robertson, J. M., 365 n

Robinson Crusoe, dialogue between, and a stranger in Gesell's Natural Economic Order, 356

'Roundabout' methods of production, 211 , 214-15

Top

S

Save, propensity to¾

and propensity to consume, 65

and rate of interest, 165 , 178 , 183 , 217-20

chronic tendency of, 347

and Hobson's theory, 367-8

see also Consume, propensity to

defined, 62

discussed, 61-5

and consumption, 217-18 , 248

and elasticity of employment, 287

its future, 372-3 , 375-6

in Treatise on Money, 60

Hobson on, 364-71

and Jevons's Trade Cycle theory, 330

Malthus on, 363-4

Mandeville on, 360-2

in Mercantilist thought, 358-9

Adam Smith on, 352

and classical theory, 177-9

Marshall on, 178 , 186-8

Saving, individual, nature of, 19 , 21 , 64-5 , 210-13

Saving, negative (dis-saving), 82

unemployment relief and, 21 , 109

and zero rate of interest, 217-18

Saving, over-, Hobson on, 365-70

Savings, accumulated, and liquidity, 194

Savings-deposits, 195

Say, J. B., 3 n , 18 , 363

Say's Law, 26

Scarcity

and yield of capital, 213-15

and productivity, 215

Schrötter, von, 344 , 359

Securities, price of, 94 , 199-200 , 206

Short period¾

consumption and changes in the rate of interest in, 93-4

elasticity of employment in, 302-3

diminishing returns in, 81 , 91-2 , 114 , 121-2 , 302 ,
305-6 , 328

wage policy in, 270

fluctuations of liquidity-preference in, 336

Short-term expectations, see Expectation, short-term

Short-term loans¾

and bank charges, 208

and changes in wage-unit, 263

Smell, a factor of production (?), 215

Smith, Adam, 352-3 , 361 n , 368

Wealth of Nations, 352 n

Socialism, 377

Solon, age of, 340 n

South Pole, expedition to, analogy of, 162

Spain, in fifteenth and sixteenth centuries, 337

Speculation, 154-64

distinguished from enterprise, 158-9

in the United States, 158-60 , 323

in Great Britain, 159-60

Speculators, professional, 154-64 , 316

'Spot' prices, 222-3

Sraffa, P., 223 n

Stability¾

conditions of, 64 , 250-4

and prices, 64 , 239 , 250-3 , 270-1 , 288-9

and wage policy, 269-71

Standard of life, and consumption, 97 , 218-19 , 262

Standard, monetary¾

and nature of money and interest, 224-5 , 228-30 , 236

risk of changes in, 144

in the nineteenth century, 308

See also Gold standard

and borrowing for unemployed, 251

and investment, 106 , 164 , 220-1 , 320 , 325 , 335 , 349 , 351 , 376-7 , 380

printing money, and liquidity, 200

Stationary state¾

depreciation in, 99

and calculation of yield, 139 , 145-6

liquidity-function in, 208

its place in economics, 293

Stephen, Leslie, on Mandeville's Fable of the Bees, 359-60

Stock exchanges, 75 , 150-64 , 199

and trade cycle, 316 , 319-20

in financial crises, 207

carrying-costs of, and trade cycle, 317-19

characteristics of, 226

and elasticity of employment, 288

Hawtrey on, 55 n

and New Deal, 331-2

and user cost, 70-1

Supplementary cost¾

defined, 56

and consumption, 98-106 , 109

and income, 56-9

and the multiplier in the United States, 128

and user cost, 68-9 , 73

in Douglas's theory, 370

Supplementary cost, current¾

defined, 59

and user cost, 70-1

Supply and demand, place of, in economics, 292-4

Supply of labour, see Labour

Supply curve, the ordinary, 281

relation of, to aggregate supply function, 44-5

Supply function, aggregate¾

defined, 25 ; 29

and choice of units, 42 n

and ordinary supply curve, 44-5

the inverse of the employment function, 89 , 280-1

of particular industries, 55 n , 115-16 , 173 , 246

for industry as a whole, 55 n

defined, 25

and user cost, 29 n , 55 n , 67

and consumption, 30 , 98

Supply price of an investment, defined, 135 ; 135-6 , 147 , 248

Supply price, long-period, 68

Supply price, normal, and equilibrium, 228

Supply price, short-period, 67-8 , 328

Surplus stocks, see Stocks, surplus

Sur-tax¾

and liquidity, 309

and inequality of wealth, 372

Top

T

Tastes, 147 , 225 , 245

Taussig, F. W., on interest, 176

Taxation¾

and inequality, 372-3

and liquidity, 309

on capital profits, 94-5

and money-wages, 264

Theory of value, 292-3

Thomas, Albert, 349 n

Thrift¾in Mercantilist thought, 358-9

Hobson on, 365 n , 366 , 368-9

Mandeville on, 362

Time-deposits, 167 n

Time-discounting, changes in rate of, 93-4

Time-element in Trade Cycle, 314 , 317-18

Time-lag, 122-5

Time-preferences of individuals, 166

Trade, balance of, 120 , 262-3 , 333 , 335-8

Trade cycles¾

theory of, 250 , 313-32

and wages, 301

and unforeseen changes, 124

and consumption, 97

Pigou on, 278-9

Trade, terms of, 263 , 270 , 334

Trade unions, 16 , 267 , 301

Transactions-motive to liquidity, see Liquidity

Transfer taxes, 160

Treasury bills as money, 167 n

Treatise on Money, 151 n

'state of bearishness' and the 'bull-bear' position in, 109 n , 169 n , 173-4

natural rate of interest in, 242-4

treatment of money in, 167 n , 194-5

and period of production, 287

savings and investment in, 60-1 , 74 , 77-80

and surplus stocks, 70

trade cycles in, 49-50 , 123 , 319 n

Top

U

Uncertainty¾

and propensity to consume, 94

and crises, 316

and expectation, 148

and rate of interest, 145 n , 218-19

and liquidity-preference, 168 , 182 , 201

and probability, 148 n

and elasticity of substitution of money, 231

and quantity theory of money, 208

Douglas on, 370

Hobson on, 364-71

in Mandeville's Fable of the Bees, 359-62

in Mercantilist thought, 358-9

and authoritarian control, 381

and State borrowing for relief of, 251

and effective demand, Malthus on, 362-4

and gold standard, 348-9

and future policy, 382

and nature of money, 235

and Protection, 334-5

and negative saving, 109 , 121

in the United States, 9

the Mercantilists on, 346-7 , 358-9

defined, 6 ; 15-16

Pigou on, 278

defined, 15

Pigou on, 5 n , 7 , 13 , 190 , 274-5

United States¾

boom in 1928-9 in, 322-3 , 327

capital expansion and depreciation in, 1924-9, 100

propensity to consume and stock-market in, 319

financial crisis of 1932 in, 207

employment and rate of interest in, 219

the multiplier in, 122 , 128

'New Deal' and recovery in, 331-2

open market operations in, 197

stock market in, 159-60 , 172

uniformity of opinion in, 159 , 172

unemployment in 1932 in, 9

wage policy in, 269

Unsold goods, see Stocks, surplus , and Capital, liquid

User cost, 53-5 , 58 , 66-73

preliminary definition, 23

defined, 53

discussed in detail, 53-5 , 66-73

and income, 58

and 'financial prudence', 109

in stationary state, 146

and surplus equipment, 109

and wastage, 99

Marshall and, 72

Pigou and, 72

and return on capital, 139

changes in, 302-3

and rising prices, 290

Utility¾

of capital, marginal, 137 ; Marshall's use of; 139-40

of money, 231

of wages, 5

of wages, marginal, 283

Top

V

Velocity of circulation of money, see Money

Vested interests, 383

Voluntary unemployment, defined, 6 , 8 , 16

Top

W, X

Wages¾

Wages, Marshall on marginal productivity theory of, 140 n

Wages, utility of, 5

marginal utility of; 253

Wage-cost, its identification with prime cost, 272-3 , 276

and prices, 299-300 , 302

their carrying-cost, 239

in Pigou's Theory of Unemployment, 272-9 , 301

changes in, in classical theory, 7-15 , 257-60 , 284

effects of changes in, analysed, 260-9

stability and changes in, 251-3 , 269-71 , 303-4

their rigidity, 257 , 266

and full employment, 289

in Great Britain, 276

and nature of money, 232-3 , 237-9

in Pigou's Theory of Unemployment, 272 , 275-7

Wage policy, 266-71 , 339 n

Pigou on, 278

in classical theory, 5-18 , 21-2 , 259 , 284

Pigou on, 13 , 238-9 , 272-8

nature of resistance to reductions of, 264

effects of policy fixing, 269-70

and full employment, 289-91

in Great Britain, 276

Wage-unit¾

defined, 41

discussed, 41-5

in the General Theory, 245-8

and marginal efficiency of capital, 141 , 147

and propensity to consume, 90-2 , 95-6 , 107

and marginal propensity to consume, 114-17

and employment function, 280-6

and foreign investment, 336-7

and liquidity-preference, 171-2 , 180

and changes in the quantity of money, 83 , 171 , 173 , 230 , 232 , 295-6 , 298-304 , 307-9

and nature of money, 230 , 232

and quantity theory of money, 209 , 295-6 , 298-304

and prices, 295-6 , 298-304 , 307-9

in pre-war Great Britain, 337

in fifteenth- and sixteenth-century Spain, 337

and Mercantilist theory, 340

Cassel on, 176

Carver on, 176

Pigou on, 188 , 190

Walras, Éléments d'Economie pure, on interest, 176-7

War¾

the Mercantilists on, 348

and future of capitalism, 380-2

saving and the desire for, 211-13 , 348

fiscal policy and growth of, 95 n

inequality of 110 , 372-5

gold-mining and, 130-1

'natural' and 'artificial', in Mercantilist theory, 341

accumulation in, 219-20

effective demand in, 220

employment in, 31

the multiplier in, 125-6

standard of life in, 125-6

Wild duck, 183

Windfall loss¾

defined, 57

and net income, 57-8 , 92-5

and changes of employment, 288

Working capital, see Capital, working

Top

Y, Z

Yield of assets, defined, 225

Yield of capital¾

due to scarcity, 213

defined, 135

relation of, to current yield, 141

and stability, 250 , 252

and marginal efficiency of capital, 135-7 , 147 , 246-8

our ignorance of 149-50

and individual saving, 210-12

estimation of in future, 221

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