GENERAL UNEMPLOYMENT II. POPULATION AND CAPITAL OUTLAY
IN our analysis of what determines the level of general unemployment at any time we have given the leading role to the amount of capital outlay being undertaken. This is the principal factor which causes consumers to have extra incomes, without also causing producers to have extra goods which they will want to sell before placing further orders or undertaking further production. There are other ways of achieving the result, some of which have already been employed in one or more countries; thus the budget may be deliberately unbalanced, in which case the beneficiaries of the increased expenditure or reduced taxation will have greater incomes available for expenditure. Or we may seek to set the ball rolling by inducing the community to increase its expenditure, and so raise the effective demand for goods and services, without an initial increase in incomes; this might be done by direct propaganda, or by redistributing the national income in favour of those more likely to spend it. But these methods offend a great many people’s ideas about correct behaviour; the ideas may not be as well-founded as their holders believe, but they do have very considerable value, if only as a check on irresponsibility. Moreover, so long as they are held, measures which offend against them may do as much harm by upsetting confidence as they do good by directly increasing effective demand. We shall have to consider possible alternatives to capital outlay as an expansionary force when discussing a programme of
action to combat general unemployment. But, in analysing the effect of a declining population, we must clearly begin with its influence on the normal source of energy, which will in any case be in use, before discussing alternatives which might or might not be introduced.