In the United Kingdom, as well as in other countries with a developed market economy, the result of trade unions, which established high wages, became the unemployment chronicle that continued for several years in a row, and during this time millions of workers have remained without work and production indicators decreased. Experts were upset.



In this situation, the British government resorted to emergency measures that it considered necessary: ​​it depreciated the currency.



As a result, the purchasing power of wages has changed, which the trade unions kept for so long.



Real wages, therefore, the equivalent in goods with wages, was reduced. The worker could not buy as much as before, although the nominal wages remained unchanged.



It was believed that in this way the real wages can be restored to a level corresponding to the free market, which will lead to the disappearance of unemployment.



Many other countries, including France, the Netherlands and Belgium, accepted the same measure, devaluation.



The country even twice a year and a half resorted to this extent, it is Czechoslovakia.



We can say that it was a disguised method of deceiving the power of trade unions.



But success did not correspond to expectations.



A few years later, workers, even trade unions, began to understand that experimenting with medium -term or long -term consequences of some anti -inflationary measures with short -term protective equipment: currency devaluation, which led to a decrease in real wages. Trade Unions had the right to withstand this.



In many countries, they included an additional item in salary agreements, which provided that wages should increase automatically with prices.



This was called indexation. Trade unions have realized the importance of indexing. Thus, the aforementioned method of unemployment, adopted by the United Kingdom in 1931 and subsequently adopted by most large governments, this method of eliminating unemployment is an obvious means of legal protection, and not a real long -term effect.



In 1936, in his book “The General Theory of Employment, Interest and Money”, Lord Keynes * raised this method so that these urgent measures taken in 1929-1933 reached the fundamental level of the fundamental orientation of economic policy.



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