Prosperity and Depression.pdf

Chap. 3The Over-investment Theoriesqualifications by Dr. ]ohan EINARSEN, who has also written itshistory and has applied the principle to a concrete case with thehelp ofmodem statistical devices in his admirable study, ReinvestmentCycle..r and their Manife..rtation in the Norwegian Shipping Indu..rtry.l§ 16. INTERNATIONAL COMPLICATIONSThe question ofinternational complications has not been exhaustivelyand systematically treated by the theorists of the presentgroup; but it is in principle not very difficult to imagine how. thecyclical movement in one country must be assumed, from the pointof view of the non-monetary over-investment theory, to influenceother countries and to be influenced by international trade conditions.What has been said in this respect in connection with themonetary over-investment theory applies also to the non-monetaryversion of the over-investment school. It has been mentionedalready that the opening of investment opportunities in newterritories is considered to have been one ofi the most potentincentives for the revival of investment during the 19th century. 2C. Over-investment resulting from Changes in the Demandfor Finished Goods: The Principle of Acceleration and Magnificationof Derived Demand§ 17. INTRODUCTIONThe monetary over-investment theory startsInfluence of from the discrepancy between the natural and theconsumers' money rate of interest, and holds monetary factorsdemand on responsible for the recurrence of over-investmentifJ1Je.stment. and disequilibrium. The non-monetary branchof the over-investment school emphasises nonmonetaryfactors, technological. changes, innovations and discoveries.The difference between the two types of over-investment1 Published by the University Institute of Economics, Oslo, 1938.See also article by the same author, " Reinvestment Cycles" in theRemew ot Economic Statistics, Vol. 20, February 1938.I This idea is fundamental to the Neo-Marxian theory of Imperialismof such writers as Rosa Luxemburg, Akkumulation des Kapitals, and