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A TREATISE ON MONEY

BK. IV

is singularly ill-adapted for achieving an Income Defla-tion. I am doubtful, therefore, whether those are rightwho believe that a period of deflation generally doesless harm than a period of inflation. It is, of course, truethat real wages are apt to be higher (for those whoare still employed) during the deflationary phase thanduring the inflationary phase ; for during the formerphase entrepreneurs are paying the factors of produc-tion more, and during the latter phase less, than theequivalent of what they produce. Prom the stand-point of distributive justice it may be preferable to robthe entrepreneur for the benefit of the consumer thanto rob the consumer for the benefit of the entrepreneur.But we must not overlook the fact that the former isassociated with under-employment and with savingsrunning to waste, whilst the latter means full employ-ment, perhaps over-employment, and a large additionto capital wealth. The warmest advocates of the valueof leisure would scarcely prefer the leisure of severeunemployment to the over-stimulated activity of aboom, and enthusiasm about a high level of real-wagesmay be cooled by a realisation that the increment ofreal-wages is being paid at the expense of the accumu-lation of wealth by the community.

At any rate, it is certain that the opinion, which Ihave sometimes heard expressed, that the real wealthof the community increases faster, in spite of appear-ances to the contrary, during a depression than duringa boom, must be erroneous. For it is a high rate ofinvestment which must necessarily by definition beassociated with a high rate of increment of accumu-lated wealth. Thus I am more disposed to sympathisewith Mr. D. H. Robertson, who thinks that much ofthe material progress of the nineteenth century mighthave been impossible without the artificial stimulus tocapital accumulation afforded by the successive periodsof boom, than with the puritans of finance—some-times extreme individualists, who are able, perhaps,