Prosperity and Depression.pdf

188 Ana{"Ysis of Theories Part ILet us investigate a little. more the foundationRelation of Professor OHLIN'S theory and draw some furtherbetween conclusions from it, not all of which have beenthe ex ante stated by the author himself, probably for lack oftlIId the period space. We shall see that Dr. LUTZ'S contention isanalysis. right, l that the Swedish ex ante analysis, if thoughtthrough to its logical end, comes very near toProfessor 'ROBERTSON'S period analysis. As Dr. LUTZ points out,in order to make use ofthe apparatus of denland and supply curvesrelating to credit, saving and investment, the period of timetaken into consideration must be very short, at least so short thatthere do not occur any revisions of the various plans during theperiod.t· After the period has elapsed, people revise their plansin the light of the experience gained during the period; in otherwords, the curves relating to saving, investment, credit:. etc.,shift to new positions.The choice ofthe length ofthe unit period which suits ProfessorOHLIN'S theory is not to be made on the basis ofthe same principlesas the choice of the length of Professor ROBERTSON'S unit period. sThe latter, Professor ROBERTSON'S " day", is chosen so as tomake it impossible, in view of the existing habits ofpayment, thatmoney received during the day should be spent during the sameday; Professor OHLIN'S unit period rests on the postulate thatplans should remain unchanged during the period.Let us now concentrate on what happens during any unitperiod. Professor OHLIN draws for the credit market an analogywith a village market for eggs where people appear with" alternativepurchases and sales plans" as represented in their demandand supply curves.· It is not quite clear how far the authorwishes to carry this analogy, but if he carries it sufficiently farby taking a very short period, his theory really coincides with that) .. The Outcome of the Saving-Investment Discussion ", Qua'Yterly]ou'Ynal of Economics, Vol. 52. August 1938. page 604.I We abstract from a number of difficulties connected with the overlappingof the plans. which is due to the fact that plans of differentindividuals are not always made at the same time and do not all extendover the same period.• This problem has been well discussed by E. Lundberg. loco cit.• passirn.c Loc. cit., page 423.