Prosperity and Depression.pdf

Chap. 8 Recent DisCllJsions on the Trade Cycle 147a mass of experience and the study of historical processes canmake the hypothesis more or less probable.!§ 6. STATIC VERSUS DYNAMIC THEORIES:SOMS METHODOLOGICAL OBSERVATIONSWe may properly terminate the first part of this book byreflecting briefly on certain fundamental characteristics of thetheories. reviewed, thereby reverting to the logical problemstouched upon in the first chapter.On an earlier occasion, we characterisedGmera/versus Mr. KEYNES' General Theory as a general ·interpartialdependence (equilibrium) theory in macro-economic'fjlli/ibrillfIJ. terms. The theory is a general interdependencetheory in the. sense that it explicitly embraces theeconomic system as a whole and represents it by means ofa limitednumber of magnitudes interrelated by a few easily comprehensiblerelationships. This explicit generality distinguishes Mr. KEYNES'system favourably from many business-cycle theories which giveonly a partial picture,· confining themselves, consciously orunconsciously, to exhibiting only some particular .relationships,which are supposed to be the crucial ones, and· leaving the resthidden, so that it is. left to the reader to supply from generaleconomic theory the missing relationships which are necessary tomake the system determinate.1 The· most.balanced and best considered·statement is· to be found inProfessE>r Hansen's Full Recovery 0" Stagnation, New York, 1938.passim, and in his paper, " Economic Progress and Declining PopulationGrowth tt, Amef'ican Economic Review, March 1939. A very good butrather unqualified statement is to be found in A 11, Economic Program forAmerican Democracy by Paul M. Sweezy, R. V. Gilbert and others, NewYork, 1938. Compare also Gerhard Calm and Fritz Lehman, EconomicConsequences of Recent American Tax Policy, Supplement I to SocialResearch, New York, 1938 ; and G. Haberler, " Interest Rate and CapitalFormation tt, in Capital Formation and its Elements, ed. by the NationalIndustrial Conference Board, New York, 1939.