be convenient, however, in the first instance to ignore the
differences between them, and to consider the forces which determine
what we may regard as the general wage-level.

The general laws of supply and demand hold good. The wages of labor
tend to a level at which the demand is equal to the supply. For, if
the demand exceeds the supply, if, in other words, labor is scarce,
wages tend to rise, sooner or later in any case, and the more promptly
in proportion as the workpeople are organized. Conversely, if the
supply exceeds the demand, if in other Words there is general
unemployment, wages tend to fall, and the strongest trade unions
cannot resist the tendency, though they may delay it. Moreover, the
higher the wages that must be paid, the smaller, other things being
equal, is the demand for labor. For, even if we leave foreign
competition out of account, and consider, as it were, labor throughout
the world as a whole, the demand for labor is by no means
inelastic. It is derived along with the demand for the other agents of
production in the manner described in Chapter V. As was there shown,
the greater the supply of the other agents of production, the greater
is likely to be the demand for labor; but these other agents can be
substituted for labor in a great variety of ways, and an increase in
wages (unless accompanied by increased efficiency) will make it
profitable for employers to effect such a substitution, where it was
not profitable before. Thus, higher wages for the same labor
efficiency must stimulate the tendency for capital to act as a
substitute for labor at the expense necessarily (since the aggregate
supply of capital will not be increased thereby) of its tendency to
serve as a complement; and this must mean a decrease in the volume of
employment. Hence the power of labor to secure a general advance of
wages by concerted or simultaneous trade union action, applied if you
will, not merely to every industry, but to every country, is
necessarily very limited. Beyond a certain point, such a policy must
result in general unemployment; and, if pushed sufficiently far, in
unemployment so extensive that it would continue even in periods of
active trade. Such a policy could neither be maintained in practice
nor would it be a wise policy from the workers' point of view.

In other words, given on the one hand the conditions of the demand for
labor (i.e. the supply of capital, natural resources, business
ability,