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¥,—ECONOMICS. 157 
in industry rather than agriculture; in finishing processes 
rather than the extraction of raw material; in transport, commerce 
and finance, rather than manufacture. No other country, therefore, 
is so completely dependent upon the restoration of peace and trade 
and economic co-operation. None is destined to suffer so acutely from 
any general disorder. At this moment perhaps none is suffering so 
much. 
It is needless to seek in excessive fecundity an explanation of our 
present troubles. There are other reasons, enough and to spare, why 
we should expect now to suffer from unexampled unemployment. Two 
exceptional causes of unemployment are now added to the normal 
movement of cyclical fluctuation. One is the difficulty of passing from 
war and war industries to peace—the difficulty of making swordsmen 
into ploughboys. The process of training and directing the new sup- 
plies of labour to fit the changing needs of industry has been broken by 
the War; there is a maladjustment of quality between labour supply 
and labour demand. The second cause lies in the damage done 
by the War and its aftermath to the economic structure of 
the world; the destruction of capital, the relapse of great nations towards 
barbarism, the breaking of easy and friendly intercourse, the con- 
tinuance of war measures, the smaller yolume of international trade 
and its shifting into new channels. The world has changed suddenly, 
if less completely, round us as round German Austria. Many of our 
trades find their former customers dead or impoverished or cut off by 
new barriers; the labour trained to those trades cannot shift to fill the 
gap in production which is left by the disappearance of those customers 
and their work. In both these ways, in terms which I used in writing 
of unemployment fifteen years ago, we have leading instances of these 
‘changes of industrial structure’ which leave legacies of enduring un- 
employment, to be reduced only as the labour ill-fitted for new needs 
is slowly and individually absorbed again or is removed by death on 
emigration.’” 
The fate of Austria has a bearing not on war alone. The world 
may change otherwise than by war. The ‘ optimum density’ of popu- 
lation for any country may be diminished not by anything happening 
in that country, but by the discovery and exploitation of resources in 
other countries ; possibly even by tariff changes. The more any country 
is specialised in its economic functions, above all if it is specialised 
in the most developed rather than in the primary functions, the greater 
is its liability to such changes. Britain, becoming yearly less self- 
sufficient, setting each year a swiftly growing people to more and more 
specialised labour, increasing each year its inward and outward trade, 
was before the War taking more and more the Austrian risk. It is 
arguable that with this lesson before us we ought no longer to take 
the risk so fully; should retrace our specialisation and aim at self- 
sufficiency—in practical terms, under a system of tariffs or bounties, 
12 Uncertainty as to the course of prices, with its paralysing effect on 
business enterprise, ought perhaps to be named as yet another special cause 
of post-war unemployment. Alternation of upward and downward movements 
of prices is, of course, one of the elements in normal cyclical fluctuation. 
