SECTIONAL TRANSACTIONS.—F. 417 
Mr. R. L. Hati.—Drfficulties of Wage Regulation in Australia. 
The system by which wages are regulated in Australia has often been described ; 
but the attention now given to the problem of rigid wage levels makes the occasion 
a suitable one for a review of recent developments, and especially of the difficulties, 
which became very marked with the appearance of the present trade depression. 
Wage fixing, which began with minimum wage legislation, developed in the various 
States either by arbitration courts or by trade boards. The Federal Government also 
set up an arbitration court to deal with disputes extending beyond the limits of a 
single State. This court in 1907 fixed a living wage according to the cost of what was 
then considered to be reasonably necessary. Since then the Commonwealth Court 
has gradually assumed a predominant place, partly owing to the ease with which it 
was possible to make a dispute extend beyond State boundaries, partly because of 
the anomalies which arose when two regulating bodies fixed wages in the same district. 
Thus, the State courts or boards came to follow the Commonwealth practice. 
This led to great uniformity of wages, as practically all the workers in the country 
had their wages fixed, either at the minimum or with additions for the skilled or 
unpleasant nature of their work. Only one alteration, of about 6 per cent. upwards, 
was made in the basic wage of 1907; the amount was varied automatically according 
to changes in the cost of living as calculated by the Commonwealth statistician. But 
it is improbable that real wages rose by more than 10 per cent. in the period 1907-1929. 
In view of improvements in industrial technique and the large amounts of capital 
borrowed abroad during the period, such an increase seems small and unlikely to lead 
to serious difficulties. Nevertheless, when the depression occurred Australian produc- 
tion costs were much out of relation with world costs. Such figures as are available 
indicate that the efficiency of production, especially in manufactures, must have fallen 
off during this period. This can be attributed partly to the arbitration procedure 
which gave the appearance of litigation to all wage questions, and embittered industrial 
relations. But the reason why such a large maladjustment as was finally revealed 
occurred, was due to the political reactions from the general conception of a fixed 
standard of living. All Governments were compelled to do what they could to 
preserve this standard, and both the tariff and foreign borrowing were used to obscure 
the real position. The high prices received after the war for wheat and wool, the 
principal exports, also gave a temporary assistance. 
Thus, a tradition of irresponsibility among workers, and to some extent also among 
employers, was developed ; and the Government was expected to remedy all difficulties. 
After the fall in world prices the exchange position became serious, and it was almost 
impossible to borrow abroad; this was followed by unprecedented unemployment. 
The wage-earning classes were extremely reluctant to see any decrease in the standard 
of living, but after about a year of depression the arbitration courts decided that 
wage reductions were inevitable. These are now in progress, showing that the wage. 
fixing mechanism is capable of adaptation ; the chief difficulty seems, therefore, to 
have been connected with the political effects of fixing a wage without reference to 
productivity. 
Mr. R. G. D. Atten.—On the Foundations of a Mathematical Theory of 
Exchange. 
1. Introduction. 
British Association papers by Jevons and Edgeworth. The references given in 
the Appendix illustrate the development of pure economic theory. 
Economics is a science, and the only social science which has, so far, passed into 
the quantitative phase. As in all sciences there are two branches: (1) empirical ; 
descriptive economics; (2) rational; pure economic theory. The rational branch 
_ starts from initial propositions to which deductive reasoning, t.e. formal logic and 
mathematical analysis is applied. Some sections of rational economics are concerned 
with complex operations involving magnitudes, so that formal logic is insufficient 
and mathematical analysis necessary. It is therefore essential that the premises 
on which a mathematical theory can be constructed should be enumerated and 
stabilised. The object of this paper is to discuss the foundations necessary for the 
construction of a mathematical theory of exchange equilibrium. 
1931 EE 
