Alfred Amonn, Der Einfluss der Preis- und Lohnsenkung auf die Gestaltung der wirtschaftlichen Konjunktur (1933)

Amonn’s 1933 lecture examines whether reductions in prices and wages can help overcome economic depression. Its argument moves from relative-price imbalances to the monetary limits on aggregate sales, then considers wage income, transitional effects, and international obstacles. The thesis is conditional: with given means of payment and unused productive capacity, lower prices can expand sales and production, while wage reductions may facilitate this adjustment without necessarily reducing aggregate labour income.

Amonn begins by insisting on a precisely bounded inquiry:

Für jede Diskussion ist es, wenn sie nicht von vornherein zur Unfruchtbarkeit verurteilt, sondern erkenntnisfördernd sein soll, notwendig, das Thema genau abzugrenzen, und das Problem klar zu formulieren, über das gesprochen und verhandelt werden soll.

English translation: For every discussion, if it is not to be condemned to barrenness from the outset but is rather to advance knowledge, it is necessary to delimit the topic precisely and to formulate clearly the problem which is to be discussed and debated.

This methodological opening distinguishes analysis of a particular economic relationship from the practitioner’s demand for comprehensive remedies. Amonn identifies the central problem as the gap between technically possible production and actual output. Unemployed workers and idle equipment indicate that productive capacity cannot be fully used because goods fail to find buyers. Crisis denotes the cumulative contraction of sales and production; depression denotes their persistence below potential. The link between output and purchasing power is explicit:

Die Grösse der Produktion ist aber in unserer modernen gesellschaftlichen, auf Arbeitsteilung und Tausch gegründeten Wirtschaft vom Absatz abhängig und dieser von den verfügbaren Geldmitteln und den Preisen.

English translation: In our modern social economy, founded upon the division of labour and exchange, however, the magnitude of production depends upon sales, and these in turn upon the available monetary means and upon prices.

Prices matter first through their proportions. Amonn considers the disparity between sharply reduced raw-material prices and comparatively resistant manufactured-goods prices. Raw-material producers lose purchasing power, industrial producers consequently lose customers, and reduced industrial output further weakens demand for inputs. Relative-price adjustment is therefore a condition of restoring exchange:

Jede Abweichung der Preise von diesem Verhältnis muss zu einem Minderabsatz und damit zur Notwendigkeit einer Produktionseinschränkung führen.

English translation: Every deviation of prices from this relation must lead to diminished sales and hence to the necessity of a restriction of production.

The argument then distinguishes relative prices from the absolute price level. Correct proportions cannot by themselves ensure the sale of all producible goods when means of payment are limited. Amonn includes credit and monetary velocity alongside cash, but treats monetary provision as bounded rather than arbitrarily expandable. Holding it constant, higher prices restrict the quantity of goods that can be sold, whereas lower prices permit greater sales.

This does not entail pushing already depressed raw-material prices still lower. Amonn advocates reducing prices that remain high relative to them. Expanded sales of finished goods should stimulate demand for raw materials and allow their prices to rise. His proposed adjustment thus combines selective price reductions with a recovery in other prices. He distinguishes this convergence from raising the general price level under an unchanged monetary constraint.

The wage discussion addresses the objection that wage cuts destroy the purchasing power required to absorb additional output. Amonn accepts that reducing prices while maintaining nominal wages would be preferable. Monopoly margins may make that possible, whereas competitive prices close to production costs may leave less room. Where labour costs constrain price reductions, he distinguishes wage rates from aggregate wage income: lower rates need not reduce total earnings if employment expands sufficiently. Wages function both as income and as prices, so a given monetary provision can finance more employment at lower rates. The claim concerns total employment and earnings, not the preservation of every worker’s income.

Amonn also separates comparison between economic states from the transition connecting them. Falling prices may initially encourage buyers to postpone purchases, but he regards this effect as limited relative to the eventual expansion of sales. Prompt adjustment should shorten disruption; resistance to an unsustainable price level prolongs uncertainty. The argument consequently gives greater weight to the anticipated effects of completed adjustment than to contraction during the process.

Finally, Germany’s coordinated price and wage reductions in winter 1931/32 do not, for Amonn, decisively refute the mechanism. Incomplete implementation, trade restrictions, and the need for international participation complicate their interpretation. The lecture formulates a depression-era adjustment argument linking monetary constraints, relative prices, and employment, while acknowledging that domestic price and wage policy can supply only part of a world-economic remedy.