Prosperity and Depression.pdf

Chap. 9Measurement of the Cycle(2.) The downswing (depression phase, contraction);!(3) The upper turning-point-that is, the turn from prosperityto depression (down-turn, crisis in the technical sense);1(4) The lower turning-paint-that is, the turn from depressit>nto prosperity (up-turn, revival).This distinction of four phases, or rather two phases and twoturning-points, should not be taken to imply more than is actuallysaid. It is not suggested that the duration of cycles shouldnecessarily be counted either from trough to trough (from revivalto revival) or from peak to peak (from crisis to crisis). It is notmaintained that each cycle (whether counted this way or that way)is to be regarded as (so to say) an individual unit or an indivisiblewhole, so that it must be explained by a single principl~, or, again,that one phase grows out ofthe previous one and must be explainedwith reference to it. Such statements may have a definite meaningand value at the end, or in a later stage, of a study such as thepresent one. At this early stage, we shall do no more thanregister certain basic facts. 8In the preceding graphs, the cyclical movementT/ariousindicesin a number of countries is represented by variousindices, a description of which is given in Appendixrecording1. An inspection of the diagrams shows anthe cycle. almost perfect concordanceinthemovements ofdifferentcurves. There are sometimes slight deviations;out they seldom exceed one year. They can often be explained1 The terms cc expansion" and U contraction" are sometimes usedin the purely monetary sense of expansion,and contraction of creditor money. We shall use them Jwhere no other meaning is implied bythe context, to denote the complex phenomenon--expansion and contractionof production and. employment plus expansion and contraction ofthe circulating medium. For the purely monetary aspect, we shallusually employ the terms IIinflation-" and IIdeflation".I See page 257.I Various writers have elaborated different typical cycle pat4:erns.Tbe Ha.rvard Economic Service, e,g., distinguishes five phases: depression,recovery, business prosperity. financial strain, industrial crisis. Spietho:ffhas a still more complicated scheme. But these schemes are based fromthe outset on a particular view as to the causation of these fluctuations.They imply generalisations which do not fit all cases. Therefore theycannot serve as starting-points, but are the result of the analysis.