Prosperity and Depression.pdf

Chap. 3The Over-investment Theoriesemphasised, thatit is the production ofdurable goods, ofconsumers'goods as well as of capital goods, which fluctuates most violentlyduring the business cycle.The following authors have developed the acceleration principle-Albert AFTALION,1 BICKERDIKE,2 Mentor BOUNIATIAN,8 T. N.CARVER,' and MARCO FANNO. 6 In recent years, it has beenexpounded most fully by]. M. CLARK,' SIMON KUZNETS," A. C.PIGOU s and R. F. HARROD.' W. C. MITCHELL,10 D. H. ROBERl'­SON,l1 and A. SPIETHOFp12 have incorporated it into their accountof the cycle as a contributory factor. 13 Mr. HARROD has, withoutmuch reference to the previous literature, rechristened the principleas "the Relation ".leThe discussion will proceed in two stages. First, the economictechnologicalprinciple will be expounded with the necessary1 Les crises periodiques de surproduction, Paris, 19T3.I "A Non-monetary Cause of Fluctuations in Employment" in Econom'icJournal, September 1914.• Les crises economiques, Paris, 1922 ; 2nd ed., 1930., "A Suggestion for a Theory of Industrial Depressions" in QuarterlyJournal 0/ Economics, May 190 3.~ Beitrage zur Geldtheorie, ed. by :Hayek.• " Business Acceleration and the Law of Demand tt in Journal ofPolitical Economy, ~Iarch 1917. Economics of Overhead Costs, Chicago,U.S.A., 1923. Controversy with Ragnar Frisch in Journal of PoliticalEconomy, October and December 193T, April 1932. Strategic Factors inBusiness Cycles, New York, 1934, pa~es 33 et seq.7 " Relations between Capital Goods and Finished Products in theBusiness Cycle" in Economic Essays in Honour 01 Wesle}' Clair Mdchell,New York, 1935.• Industrial Fluctuations, 2nd ed., 1929, Ch. IX.• The Trade Cycle, Oxfqrd, 1936, Ch. II.10 Business Cycles, 1913.11 A Study 01 Industrial Fluctuation, London, 1915, Part I, Ch. 2. BankingPolicy a1~d the Price Level, 3rd improved ed., London, 1932, Ch. 2.11 If Krisen " in Handworterbuch der Staat.swissenschaften, 1925.11 Compare also the critical discussion of the principle by J. Tinbergen," Statistical Evidence on the Acceleration Principle ". in Economica,Vol. V (New Series), May 1938, pages 164-176. Professor Tinbergendoes not find much statistical evidence, but this is not surprising inview of the many qualifications which must be made (see below inthe text).U This would not seem to be a fortunate terminology, because, apartfrom the relation between consumption and investment which is postulatedby the acceleration principle, there are relations between the twomagnitudes of another kind (see below).