ws, and
there will be a full, healthy production at the lower prices.

The mere fact then that prices are generally lower than they were five
or ten years ago is no evidence of depressed trade. Depressed trade
signifies not merely low prices but relaxed production: more has been
produced than can be sold at the lowest profitable prices, and markets
are congested with stock, but less is being produced than could be
produced with existing means of production. The fact which faces us in
a period of depression is an apparent excess of productive power. If
this excess were of labour alone it might be explained with some
plausibility as due to the displacement of labour by machinery. For it
has been admitted that the first and immediate effect of introducing
labour-saving or labour-aiding machines may be a diminution in the
demand for labour, even when the labour of making and repairing the
machines and of distributing the increased product which finds a sale
is taken into consideration. The simultaneous application of a number
of new forms of machinery attended by other general economies in the
organisation of industry might seem to explain why for a time there
should be a general redundancy of labour in all or most of the chief
industries of a country. Such an over-supply of labour would result
from the accumulated action of "first effects." When the cheapening
influences of machinery had time to exercise their full natural
influence in stimulating consumption the labour temporarily displaced
would be again fully utilised; for the moment, past labour saved and
stored in forms of fixed capital would do a great deal of the work
which would otherwise be done by present living labour. But such an
explanation is wholly negatived by the fact that in a depressed
condition of trade there is an excess of forms of capital as well as
of labour. There exists simultaneously a redundancy of both factors in
production. Labourers are out of work or are in irregular employment,
mills and factories are closed or working short time, the output of
coal and metals is reduced, and yet with this relaxed production the
markets are glutted with unsold goods unable to find purchasers at a
price which will yield a minimum profit to their owners. To this must
be added, in the case of the extractive industries, agriculture,
mining, etc., the exclusion from productive use of land which had
formerly found a profitable employment.

Sec. 2. To this condi