68 SOCIAL SCIENTIST allows Keynes to focus on the output adjustment of consumption goods alone. This, after all, is the source of a fixed 'multiplicand^ in the Keynesian single period which delivers him his famous multiplier, and enables him to dismiss as unimportant the induced investment decision during his short priod—the major preoccupation of the Swedish economists of his time. The book presents two basic models. The first one presented earlier in the book tries to model the interaction between an agricultural and a non-agricultural sector neither of which has been penetrated by capitalism. The author uses this model to analyse some problems relating to India's economic past, presumably before the rise of organized industry. Even though this part examines a number of important issues relating to our economic history, we will, for want of space, focus on his second group of ideas that give us his second model analysing our contemporary economy. The Model The important features of die ambience in which the model has been set up are the following. The agricultural sector's output net of its own consumption is given in the short run as a first approximation, while its marketed supply depends on the terms at which it can sell its products to buy industrial goods. An increasing part of agricultural output is held as inventory investment in the agricultural sector as the terms become more and more unfavourable for agriculture. The equilibrium terms of trade between agriculture and industry is established by the market clearance condition for the agricultural goods. In the industrial sector real wages in terms of agricultural goods are fixed. Industry has a supply schedule which tends to equate the marginal product of labour with its wage in product terms. There is no price adjustment mechanism in the short run to establish demand-supply equality for industrial production. Of ex-ante demand and supply, whichever is less then becomes the quantity actually produced and traded. The demand for this sector comes partly from the agricultural sector, represented by the latter* s marketed output and partly from investment and consumption demand of industrial capitalists. The influence of money, credit and the government has been studied later as a closer approximation to reality. We may first examine the skeletal story without these complications. The set-up just described suggests that in the short period, industrial output may be limited by any one of three factors. First of all, the wage bill in industry cannot exceed what is marketed by the agricultural sector. Given the real wage in terms of agricultural goods, it implies that a definite amount ofemployement and production in industry is associated with each terms of trade. The worse the terms for agriculture, the more of its output is held as inventory and the less is sold to the industrial sector, thus reducing its potential of employment and output. Since the industrial wage is fixed in terms of agricultural goods, at each terms of trade there is a maximum output beyond which industry would not expand its production.