The authors such as Sismondi, Malthus and Vorontsov, who are groping after the problem of equilibrium between saving and investment, are treated with even less sympathy (though she has a kindly feeling for Sismondi, to whom she considers that Marx gave too little recognition[41]) for she is either oblivious that there is such a problem, or regards it as trivial.[42] We leave the discussion, at the end of Section II, at the same point where we entered it, with the clue to the inducement to invest still to find. Section III is broader, more vigorous and in general more rewarding than the two preceding parts. It opens with a return to Marx's model for a capitalist system with accumulation going on. Our author then sets out a fresh model allowing for technical progress. The rate of exploitation (the ratio of surplus to wages) is rising, for real wages remain constant while output per man increases. In the model the proportion of surplus saved is assumed constant for simplicity, though in reality, she holds, it would tend to rise with the real income of the capitalists.[43] The ratio of constant to variable capital is rising for technical reasons. (The convention by which the annual wear and tear of capital is identified with the stock of capital now becomes a great impediment to clear thinking.) The arithmetical model shows the system running into an _impasse_ because the output of Department I falls short of the requirements of constant capital in the two departments taken together, while the output of Department II exceeds consumption.[44] The method of argument is by no means rigorous. Nothing follows from the fact that one particular numerical example fails to give a solution, and the example is troublesome to interpret as it is necessary to distinguish between discrepancies due to rounding off the figures from those which are intended to illustrate a point of principle.[45] But there is no need to paddle in the arithmetic to find where the difficulty lies. The model is over-determined because of the rule that the increment of capital within each department at the end of a year must equal the saving made within the same department during the year. If capitalists from Department II were permitted to lend part of their savings to Department I to be invested in its capital, a breakdown would no longer be inevitable. Suppose that total real wages are constant and that real consumption by capitalists increases slowly, so that the real output of Department II rises at a slower rate than productivity, then the amount of labour employed in it is shrinking. The ratio of capital to labour however is rising as a consequence of capital-using technical progress. The output of Department I, and its productive capacity, is growing through time. Capital invested in Department I is accumulating faster than the saving of the capitalists in Department I, and capitalists of Department II, who have no profitable outlet in their own