wage
earner can do something in self-protection, for the level of prices
may be in some measure affected by his policy in handling his
earnings.

A period of high wages is accompanied by and is in some sense an
incident of a high level of prices. Now we recognize high wages,
considered in itself, as beneficial to the community, for it gives
opportunity, at least, for comforts in life and a provision for the
future that otherwise would be lacking. But if prices have advanced as
much as wages, the apparent improvement to the laborer is merely in
nominal wages, while that which alone can benefit him is higher real
wages. Now let us see what the workman could do to advance real wages
as contrasted with nominal wages.

What will be the effect on prices of the use of surplus earnings
during a period of high wages?

If the surplus earnings are expended, they will be used either in
meeting the higher prices of customary commodities, or in meeting
these advanced prices and also in purchasing additional commodities.
The first case will occur only if, and when, the advance in price
equals the advance in wages, for only in that event will the new wages
just cover the new cost of customary commodities. Then this
expenditure of the entire income in customary commodities tends to
keep up the price level and any benefit from higher wages disappears.

In the second case, so far as the worker spends his surplus earnings
in meeting advanced prices for customary commodities, he tends to
maintain prices at the higher level, and so far as he buys additional
commodities, he increases the demand for them and tends further to
advance the price level.

If, on the other hand, the worker will save from his surplus earnings,
he will increase the community's capital, and this will tend, directly
or indirectly, to cause the production of further commodities, so
increasing the supply of commodities and therefore tending to reduce
prices.

In any case, the worker should save as much as possible, as this tends
to reduce the price level and so to better his condition. Or, putting
it more simply, in time of high wages the worker ought to produce as
much as possible and consume as little as possible, both influences
tending to increase the stock of commodities for his ultimate gain and
for that of the community.

In fact, a high level of prices may be due measurably to some wasting
of the world's capital--as in war, for instance--and then the onl