It would, indeed, be a miracle, if it were not for the fact that those old economic laws, whose impersonal forces of supply and demand, whose existence some people nowadays are inclined to dispute, or to regard as being in extremely bad taste, really do work in a manner after all.  They are our co-ordinators, the only ones we have; and they do their work with much friction and waste, only by correcting a maladjustment after it has taken place, by slow and often cruel devices, of which one of the most cruel is, precisely, unemployment and all the misery it entails.

THE CAUSES OF TRADE DEPRESSIONS

I do not propose to deal with such branches of the problem of unemployment as casual labour or seasonal fluctuations.  I confine myself to what we all, I suppose, feel to be the really big problem, to unemployment which is not special to particular industries or districts, but which is common to them all, to a general depression of almost every form of business and industrial activity.  General trade depressions are no new phenomenon, though the present depression is, of course, far worse than any we have experienced in modern times.  They used to occur so regularly that long before the war people had come to speak of cyclical fluctuations, or to use a phrase which is now common, the trade cycle.  That is a useful phrase, and a useful conception.  It is well that we should realise, when we speak of those normal pre-war conditions, to which we hope some day to revert, that in a sense trade conditions never were normal; that, at any particular moment you care to take, we were either in full tide of a trade boom, with employment active and prices rising, and order books congested; or else right on the crest of the boom, when prices were no longer rising generally, though they had not yet commenced to fall, when employment was still good, but when new orders were no longer coming in; or else in the early stages of a depression, with prices falling, and every one trying to unload stocks and failing to do so, and works beginning to close down; or else right in the trough of the depression where we are to-day; that we were at one or other of the innumerable stages of the trade cycle, without any prospect of remaining there for very long, but always, as it were, in motion, going round and round and round.

What are the root causes which bring every period of active trade to an inevitable end?  There are two which are almost invariably present towards the end of every boom.  First, the general level of prices and wages has usually become too high; it is straining against the limits of the available supplies of currency and credit, and, unless inflation is to be permitted, a restriction of credit is inevitable which will bring on a trade depression.  In those circumstances, a reduction of the general level of prices and wages is an essential condition of a trade revival.  A reduction of prices and wages.  That point has a significance to which I will return.