THE PRESIDENTIAL ADDRESS 23 



To-day many of the factors formerly free are relatively fixed, such 

 as wage levels, prices, market quotas, and when an external impact 

 at some point strikes the organism, instead of the effect being ab- 

 sorbed throughout the system by adjustments of all the parts, it now 

 finds the shock evaded or transmitted by many of them, leaving the 

 effects to be felt most severely at the few remaining points of free 

 movement or accommodation. Unemployment is one of these. 

 The extent to which this fact throws a breaking strain upon those 

 remaining free points is not completely analysed, and the new 

 economics of imperfect competition is not fully written out or 

 absorbed. The delicate mechanism of price adjustment with the 

 so-called law of supply and demand governed the whole movement, 

 but with forcible fixation of certain price elements consequences 

 arise in unexpected and remote quarters. Moreover, the search 

 for a communally planned system to secure freedom from malad- 

 justments involves a new economics in which the central test of price 

 must be superseded by a statistical mechanism and a calculus of 

 costs which has not yet been satisfactorily worked out for a com- 

 munity retaining some freedom of individual action and choice. 

 The old international currency equilibrated world forces and 

 worked its way into internal conditions in order to do so. But the 

 modern attempt to prevent any internal effect of changes in inter- 

 national trade, or to counteract them, and the choice of internal 

 price stability at all costs against variable international economic 

 equations, has set economic science a new structure to build out of 

 old materials. At this moment when elasticity is most wanted, 

 stability leading to rigidity becomes a fetish. The aftermath of war 

 is the impossibility of organising society for peace. 



The impact of economic science upon society to-day is intense 

 and confusing, because, addressing itself to the logic of various sets 

 of conditions as the likely or necessary ones according to its ex- 

 ponents' predilections, it speaks with several voices, and the public 

 are bewildered. Unlike their claims upon physics and mathematics, 

 since it is dealing with money, wages, and employment, the things 

 of everyday, they have a natural feeling that it ought to be easily 

 understandable and its truth recognisable. Balfour once said, in 

 reference to Kant, ' Most people prefer a problem which they 

 cannot explain, to an explanation which they cannot understand.' 

 But in the past twenty years, the business world and the public 

 have become economics-conscious, and dabble daily in index 

 numbers of all kinds, and the paraphernalia of foreign exchange and 

 statistics of economic life. The relativity of economic principle to 

 national psychology baffles the economists themselves, for it can 

 be said truly at one and the same time, for example, that confidence 

 will be best secured by balancing the Budget, and by not balancing 



