ABSTRACT
I 17. The idea that demand for labour as a whole might be failing to keep pace with the supply of labour was raised at that time only to be dismissed. It was ruled out by the Majority of the Royal Commission on theoretic grounds. It was ruled out in my study on grounds, not of theory, but of the facts as they presented themselves up to that time: "There is no general failure of adjustment between the growth of the demand for labour and the growth of the supply of labour. The forces which constantly tend to bring about this adjustment between the growth of the demand for labour and the growth of the supply of labour have not been brought to the limit of their power." But the limitations of this cheering conclusion were carefully noted:
"The statement that the country is not over-populated, and that its industrial system is still capable of absorbing the growing supply of labour, must always be something of the nature of a prophesy ... Because up-to-date industry has expanded, the inference is made that it is still expanding, and capable of expansion. Because this expansion in the past has taken place through alternations of good years and bad years, the inference is made of any particular period of depression that it is only a temporary phase and will give way to renewed prosperity. All this, however, is far from inevitable.";'
On the facts up to that time, the assumption of economic theory that demand in total could be left to look after itself appeared to be justified in practice. As the supply of labour had grown, so on the average had the demand for labour. With every pair of hands God sends a mouth. There had been a rising return to labour throughout the nineteenth century and this continued.
