22 
there would be no compensation of displacement in department II 
In department I the wage per man is assumed to remain unchanged 
* It might be argued that wages in department I should rise 
in step with those in department II, and this would 
automatically provide the necessary increase in demand 
of department I for the output of department II. We have, 
however, to consider that the wage increase in dep.I 
will have to be shifted to prices and that this ultimately 
would also increase the prices of output in dep.II, so that, 
in real terms, the rise in wages in depl would not 
bring about the required increase in demand. 
Now obviously compensation requires that there should be 
an increase in output in department II becausethat is the 
only way in which the technical progress could be turned 
into an increase in standard of life. 
Since the relations we have seen are valid in the department 
scheme can be automatically extended to the change of 
the variables having taken place in a certain period 
we have ( from p. 16 ): 
A P 2 = A W-| + A c 1 + A c 2 . 
that is the realisation of gross profits (surplus and 
depreciation ) in department II (without which the increase 
in output is not feasible ) depends on an increase in 
the wage bill in department I, except in so far as 
capitalist’s consumption in the two departments increases, 
but we can assume that any rise from this source would 
generally be insufficient to effect the compensation. 
The output in department I has therefore to rise which 
presupposes investment in department II.