4 SOCIAL SCiPmiSI employment has to go with a fall in real wage rate, even though the entrepreneurs' attempt to cut money-wages is not the appropriate method of bringing this about. This aspect of Keyncs's theoretical scheme, namely, that the real wage is inversely related to the level of employment in tise short run, is a systematic element of the General Tlieory, and is discussed at length particularly in Chapter 2 and throughout Book V. This contrasts with the popularized version of Keynes's economics, where it -is often given to understand that until full employment is reached, an increase in investment leads to a rise in employment without any change in the price variables. This so-called quantity adjustment story, whatever may its status be, is certainly not a proper representation of the General Theory. One reason why this aspect of the General Theor) has either been overlooked or misunderstood (or, as we might argue later, deliberately pjayed down) is Keynes's use of wage units for the measurement of the aggregate variables. The wage unit, defined in Chapter 4 of the General Theory, we may recall, is the money-wage due to a unit of homogeneous labour in the economy. The theory of effective demand as presented in the General Theory actually derives the response of total output measured in wage units to investment measured also in wage units. Since the w^age unit is taken to be unchanging by assumption of a rigid money-wage, the adjustment of the supply of output to its demand, both measured in terms of an unchanging wage unit, creates the spurious impression of a strict quantity adjustment process before full employment. But as we have already noted, according to Keynes, the adjustment of output to increased demand comes about by a rise in employment accompanied by a fall in the real wage rate. If the wage unit, that is, the money-wage rate, is given, it means that during the multiplier process, prices are rising and this process goes on until the price rise has so reduced the real wage rate as to make it equal to the marginal product of labour at the increased employment level. Keynes himself sets this process out quite clearly as follows: ...when effective demand is deficient there is underemployment of labour in the sense that there are men unemployed who would be willing to work at less than the existing real wage. Consequently, as effective demand increases, employment increases though at a real wage equal to or less tlian the existing one, until a point comes at which there is no surplus of labour available at the then existing real wage; ...upto this point the decreasing return from applying more labour to a given capital equipment has been offset by the acquiescence of labour in a diminishing real wage.^ Thus tlie real wage movement along a multiplier process is