Prosperity and Depression.pdf

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Chap. , Ullder-COll~rIl1lJption 11Jeories 137insufficient to absorb the new capital goods as they are completed.The obscurity will remain·in the absence of answers to the initialquestion as to what changes in the flow of money from saving tospending, from spending to saving, or from one branch ofspendingto another, are capable of restoring equilibrium or forestallingdisturbance. 1Unfortunately, explicit answers to this question are few and farbetween. But, since we are interested rather in possible theories(that is, in hypothetical explanations) than in theorists and theirdoctrines, we may leave the matter there.§ 4. THE FAILURE OF WAGES TO RISE SUFFICIENTLY AS THE CAUSEOF THE EXCESSES OF THE BOOMIn its bare outline, the argument is this. TheLag inwage-riseprosperity phase of the cycle is characterised by agreat increase in the production of capital goods.Islil1JllJales The breakdown is caused by U over-investment".invlstmlnt. (As will be seen later, it is not always clear exactlywhat the authors whose theories are discussed inthis section mean by over-investment.) The ,necessary stimulusand the necessary funds for these investments are derived, in. partat any rate, from the excessive profits of entrepreneurs. Thisprofit-inflation can and must arise because wages and certain otherincomes fail to advance in harmony with rising prices or fallingcosts due to rapid technical progress.This theory has been used to explain the business cycle in generalby· E. LEDERER 1 and E. PREISER.8 In recent writings, it hasfrequently been advanced as an explanation ad ~ of the lastAmerican boom. tIt is obviously closely connected with the monetary overinvestmenttheory. A certain l~g of wages or other income1 Cases are of course conceivable in which no such change would besufficient to restore equilibrium.s Lederer, Ope cit., pages 393 and 394.• Preiser: Gftundzuge dey KonjunktuytkeoYie, 1933., Ct. A. D. Gayer : ~fonetaY~J Policy and Economic Stabilisation, pages113-131, 1935, and A. B. Adams: Our Economic Revolution, pages I-IS,1934·
AnaIJsis of TheoriesPart I(especiallyt of the relatively inflexible incomes such as those ofState officials, pensioners, rentiers, the holders of fixed-incamebearingsecurities, and the like) is a. normal and important corollaryof forced saving-that is, of the formation of capital by meansof an inflationary expansion of credit. If wages and all otherincomes were to rise automatically with, and to the same extentas, prices with each injection of new money, there would be littlescope for forced saving.As we have seen, the monetary over-investment theory runsmainly in terms of the rate of interest. According to it, theexpansion is brought about by the fact that the rate of interestis too low, either because the money rate of interest has beenlowered or because the natural rate has risen. It is obviouslycompatible with this view that the movement of wages and otherincomes should also have a determining influence. If wages, etc.,fail to rise, profits swell; and this provides a. strong stimulus forfurther expansion of credit and investment. In the terminologyof the over-investment sch.ool, the profit rate rises; hence thedemand for credit goes up and credit inflation ensues. Thus thelag. of wages and other income is an important factor in thereinforcement of the cumulative expansion process. It followsthat the boom could be stopped by a sufficient rise of wage ratesas well as ofinterest rates.So far, this type ofunder-consumption theory 1 and the monetaryover-investment theory are in no way contradictory, but are rathercomplementary to each other. There seems also to be agreementthat credit expansion is a necessary feature ofthe picture.1 It may, of course, be argued that this type of theory is not properlyan "under-consumption" theory, since it stresses the costaspectofwages,etc., rather than the fact that they constitute demand for consumers'goods. There is also a certain contradiction, at least on the surface, inthat the same writers who see in a lag of wages a stimulating factor forthe boom are nearly all of the opinion that a fall in wages intensifiesdepression. That is to say, they advocate a rise in wages in order tocheck the boom and to combat the depression. It would, however,seem possible to reconcile these two propositions by special assumptionsabout the monetary situa.tion. During the depression, a fall in wagesmay conceivably lead to the liquidation of bank credit, while a failureof nominal wages to rise during the upswing does not have the samedeflationary or anti-inflationary effect.
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PROSPERITY AND DEPRESSION
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PROSPERITY AND DEPRESSION was origi
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VIPre/tNtmore apt to meet the shock
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PREFACE TO THE 1939 EDITIONIn prepa
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CONTENTSINTRODUCTION .PART I. SYSTE
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XVIAnalYtical Table ofContentsA. TH
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XVIIIAnalYtical Table 0/· ContmtJc
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xxAna!Jtical Table of Contents§ 6.
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XXIIAna!Jtical Table of ContentsA.
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xxivAnalytical Table of Contents§
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111/rotltiGtiollThe second part of
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CHAPTER 1PRELIMINARY REMARKS§ I. T
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Chap. 1 PreliJl/inary RIll/arks 7Ie
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Chap. I Preliminary Remarks 9It has
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Chap. I Preliminary Remarle.s IIA f
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Chap. IPreliminary Remar!eJNaturall
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Chap-, 2 The PurelY Monetary Theory
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Chap. 2.The PurelY Monetary Theoryp
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Chap. 2.The PurelY Monetary Theoryp
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Chap. z The PurelY Monetary Theory
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Chap. 2.The PurelY Monetary Theoryi
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Chap. 2The PurelY Monetary Theoryco
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Chap. 2The PI/relY Monetary Theorya
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CHAPTER 3THE OVER-INVESTMENT THEORI
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Chap. 3The Over-investment Theories
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Chap. ;The Over-investment Theories
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Chap. 3 The Over-investment Theorie
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Chap~ 3 The Over-investment Theorie
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Chap. ; The Over-:-im;estment Theor
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Chap. 3 The Over-jf/Pestment Theori
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Chap. 3The Over-inve.Jtment Theoric
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Chap. 3The· Over-investlnent Theor
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Chap. 3 T h~·· Over-investment Th
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Chap. 3 The Over-i1l1Jesfmenf Theor
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Page 112 and 113: Chap. 3The Over-investment Theories
Page 114 and 115: Chap. 3The Over-int 1 estment Theor
Page 118 and 119: Chap~ 3 The Over-investment Theorie
Page 120 and 121: Chap. 3 The Over-investment Theorie
Page 124 and 125: Chap. 3 The O'IJer-investment Theor
Page 126 and 127: Chap. 3 The Over-illtJ6slmmt Theori
Page 132 and 133: Chap. 4 Changes in Cost as Cause of
Page 134 and 135: Chap. 4Changes in Cost as Cause of
Page 136 and 137: Chap. 4 Changes in Efficiency as Ca
Page 138 and 139: Chap. 4 Error Theories 113cars is d
Page 140 and 141: Chap. 4 The Debt-Deflation Theory l
Page 142 and 143: Chap. 4 Filkllldal Strwtllrl and th
Page 144 and 145: Chap. ,Under-consumption TheorilsIt
Page 146 and 147: Chap. S Under-conJllflJption Theori
Page 148 and 149: Chap. , Under-consumption Theories
Page 150 and 151: Chap. 5 UnJer-con.r1l111ptiOIl T!Ho
Page 152 and 153: Chap. 5 Under-consumption Theories
Page 154 and 155: Chap. ~(( top " ofthe structure ofp
Page 156 and 157: Chap. 5Under-consumption TheoriesTh
Page 158 and 159: Chap. S 133maladjustment or an insu
Page 160 and 161: Chap. SUnder-consumption Theoriesth
Page 164 and 165: Chap. 5Under-consumption TheoriesTh
Page 166 and 167: Clap. ~Under-mullfIJption Theoriesc
Page 168 and 169: Chap. 6 U Psych%gica/ Theories" 143
Page 170 and 171: Chap. 6With the introduction of the
Page 172 and 173: Chap. 6 CC Pfych%gi&aJ TheorieJ " 1
Page 174 and 175: Chap. 6 149their own moneyJ the rep
Page 176 and 177: CHAPTER 7HARVEST THEORIES.AGRICULTU
Page 178 and 179: Chap. 7 Agri~Nihire and the Btisine
Page 180 and 181: Chap. 7Agriculture and the Business
Page 182 and 183: Chap. 7Agrie-IIJtNre and the BIIJi"
Page 184 and 185: Chap. 7Ag,.kuJture and the Business
Page 186 and 187: Chap. 7 161It is important to consi
Page 188 and 189: Chap. 7A
Page 190 and 191: Chap. 7AgriclJlture and the Busines
Page 192 and 193: Chap. 7Agriculture aIIti the BlIJin
Page 194 and 195: Chap. 8Recent Discussions on the Tr
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Page 204 and 205: Chap. 8 Recent DiscUJsion.! on the
Page 206 and 207: Chap. 8 Reant DisCll.fsions on the
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Chap. 8Recent Discussions on the Tr
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,Chap. 8 '&Bcent Discussions on the
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Chap. 8Recent Discussions on .the T
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Chap. 8 Recent DisCIISsion.s on the
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Chap. 8 Recent Discussions on the T
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Chap. 8 Recent Di~rcussions on the
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Chap. 8 H.ece/it DiJcussiofu on the
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Chap. 8Recent Discussion.! on the T
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Chap. 8 'Recent Discussions on· th
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Chap. 8 Recent Di.rcuJ.rionJ fJn th
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Chap. 8Recent Discussions on the .T
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Chap. 8 Recent DisCllJsions on the
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Clap. 8 ReGent DisfllJsions on the
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Chap. 8Recent Di.scusJions on the T
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Chap. 8R.e&lIIt DisaunOlU 011 the T
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Part IISYNTHETIC EXPOSITION RELATIN
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Nature and Causes of the 0(1,Part I
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160 Nature and Causes of the CycleP
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%6z Nahlre IlIId CtlIISes of the Cy
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Nature and Catlses 0./ the CyclePar
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2.66 Nature and ~auses of the Cycle
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2.68 Nature and Causes of the Cycle
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Nat., and CaNses of the CyclePart n
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Nature and. Causes of the CyclePart
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274 Nature and Causes· oj" the Cyc
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Nature.· and Causes· of the Cycle
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NaJr, and Casls of the ey,,,Part II
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180 Nature and Causes oj" the Cycle
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Nature and Causes of the CyclePart
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Na/Nrc and Causes of the CyclePart
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286 NatNr' and CalIS's· of the 01'
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288 Nature and Causes of the Cycle
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Nature and Causes of the C;YclePart
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3 00 Nature and Causes of t~ Cycle
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Nature andCause.r of the CyclePart
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Nature and Causes of' the CyclePart
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Nature and CaUSdS of the CyclePart
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~IO Nature and CauJes oj the CYfl,
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Nature and CauJeJ of the CyclePart
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Nature d11d Causes. of the CyclePar
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Natllre and Causes of the CyclePart
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N atnre and Causes of the ,CyclePar
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Nature and Callses 0./ the CyclePar
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334 Nature and' Causes of the Cycle
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;;8 Nature and Causes of the Cycle
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34° Nature and Causes of the Cycle
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Nature and Cau.re.r ~f the Cycle Pa
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344 Natllre and Callses of the Cycl
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Nature and Causes oj. the CyclePart
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Nature and Causes of tht Cycl'Part
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Nature and· Causes of the CyclePar
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Nature and Callses of the C:JclePar
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Nature and Causes of the OclePart I
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392 Natllre and Causes of the Cycle
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394 Nature and Causes of the 0c1e P
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4°2. Nature and Causes of the Cycl
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CHAPTER 12INTERNATIONAL ASPECTS OF
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Nature and CatlSes of the CyclePart
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410 Nature and Causes 0.1 the Cycle
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4 1 2. Nattire and Causes of the Cy
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418 Nature and Causes of the C;ycle
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42.0 Nature and Causes of the Cycle
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42.2. Nature and .Causes of the Cyc
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Nature and Causes ~I the Cycle Part
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Nature and Callses of the CyclePart
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43° Nature and Causes of the Cycle
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o • ANature and CalISe.! of the C
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Nattire and Causes of the C:JclePar
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442. Nature and Causes of the Cycle
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Nature and Causes qf'the CyclePart
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Part IIIFURTHER REFLECTIONS ON RECE
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Recent Developments in Trade Cycle
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Recent Dell,Jopm,ntI in TraJ, eycJ,
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Recent Develop"lents in Trade Cycle
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Recent Developmenti in Trade Cycle
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47° Recent Developments in Trade C
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47 2 Recent Developments in Trade C
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474 Recent Developments in Trade Cy
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Recent Developments in, Trade Cycle
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49° Recent Developments in Trade C
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49 2 Recent Developments in Trade C
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soo Recent Developlllel1ts in Trade
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Appendix IDESCRIPTION OF THE INDICE
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Appendix I 5 11Employment.1911- 193
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Appendix IIB. Number of workpeople
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NAME INDEX TO PARTS I AND IIAdams,
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Name Index to Parts I and IIKeynes
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SUB}EC1' INDEX TO PARTS I AND IIAcc
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Subject Index to Parts I and II 5 2
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.. Subject Index to Parts I and IIB
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Subject Index 10 Paris I and IIInve
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Subject Index to Parts I and IIProd
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Subject Index to Parts I and IIWage
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Name and Subject Index to Part IIIK
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