Prosperity and Depression.pdf

Chap. 3 The Over-investment Theories 77This over-production has been greatly facilitated-or rather,perhaps, made possible-by the development of modern methodsofproduction, which have rendered the production offixed capitalgoods largely independent oforganic growth. Professor SPIETHOFFrefers especially to the substitution of iron, steel and cement forlumber, ofmineral coal for charcoal, etc. Contributing factors arefurthermore the long interval between the beginning of the constructionof plant and factory and the po~t at which they begin toturn out their products, and the durability of these instruments.(These latter circumstances will he discussed more fully in connectionwith other theories of the cycle in which they are pivotal.)Thus there develops an over-production ofShortage of producers' goods and durable consumers' goods.labour These are the remaining glove. But where is theand means missing one? Is not the missing one a purelyofsubsistence. monetary phenomenon-namely, investible fundswhich could be supplied by the printing press?No, answers Professor SPIETHOFF. The lack of monetary fundsavailable for investment represents a shortage ofphysical goods of acertain kind. It becomes impossible to utilise the whole supply ofraw material and equipment destined for the construction ofmorecapital equipment and durable consumption goods, for the simplereason that they alone cannot do the job. They could do it only incollaboration with labour and incidentally with means ofsubsistencefor the labourers. A lack of investible funds simply means thatthese complementary goods are not available. There we have themissing glove. It consists of labour and consumers' goods.From this propo~ition we must draw the conclusion (althoughProfessor SPIETHOFF does not do so himself) that, if the rate ofsaving did increase-i.e.,ifsome people did refrain from consumingtheir whole income-the complementary goods would be forthcomingand the boom could continue.Ifwe have correctly interpreted Professor SPIETHOFFS' theory, 1his diagnosis of the disequilibrium at the end of the boom issubstantially the same as that given by the monetary overinvestmentschool. The allocation of factors of production toI See the penetrating critical analysis by Professor G. Halm (loc. cit.,pages 3°-34).