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L'et us assume that wages have been in fact generally reduced, and likewise taxes as a counterpart of cuts in civil servants' salaries. Now the entrepreneurs owing to the "improved" pricewage relation utilize their equipment to capacity and in consequence unemployment vanishes. Has depression been thus overcome? By no means, as the goods produced have still to be sold. Now, production has risen considerably and as a result of an increase in the price-wage relation the part of production equivalent to profits (including depreciation) of the capitalists (entrepreneurs and rentiers) has grown even more. A precondition for an equilibrium at this new higher level is that this part of production which is not consumed by workers or by civil servants should be acquired by capitalists for their increased profits; in other words, the capitalists must spend immediately all their additional profits on consumption or investment. It is, however, most unlikely that this should in fact happen. Capitalists' consumption changes in general