ABSTRACT
This chapter addresses the problems raised by the memorandum of Messrs. Barker, W. C. Mitchell, and Person, of productive capacity remaining chronically unutilized, even in good times. It shows that it has been reasonably well established that there exists a very considerable margin of unused productive capacity owing to the condition commonly thought of and spoken of as limited effective demand. The Chamber of Commerce of the United States has made a survey of the possible increase in demand growing out of a general standard of living of $2,500 per family. The revival in the work of making capital equipment is an intensified reflection of the forces that gave rise to it; and it brings about a further revival in demand for things in general. A compulsory increase of wages, by increasing costs of production, might lead to restriction of output in the attempt to protect profits–in short, to just the opposite of the desired effect.
