Prosperity and Depression.pdf

Chap. 9Definition of tbe Cycle§ 5. THB SECULAR. TRENDThe economic cycle i.p ·wmch we are primarilyVarioN.! interested is that alternation ofrelatively prosperousIOOJponents· of and depressed times, together with all the concomittime-series.ant changes in all parts of the economic system,which extends over the period of three to twelveyears. This movement we call the business cycle proper.Besides (I) the business cycle proper, we find other movementsreflected in the time...series of important economic magnitudesnamely,(z.) a secular trend, (3) seasonal variations within thespan ofone year, (4) occasional disturbances attributable to erraticforces from outside the economic system in the strict sense, and(,) the so-called cc long waves" covering periods of fifty yearsor more.The secular trend relates to the continuous riseThe meaning in volume of production, real income, productionof the trend of particular commodities, real wages, etc., whichin different has taken place, with relatively short setbacks, during.Imes. the nineteenth and twentieth centuries. Such atendency of the fundamental magnitudes to growis the criterion of a progressive economy. As we usually thinkof societies as progressive, we assume-and have hitherto beenlucky enough to find-upward-sloping trend curyes for productionand consumption. But it is by no means necessary that thesecular change should take place at a constant rate,. or that itshould always ~lope upward along a smooth curve which canconfidently· be extrapolated into the future. Nor is it excludedthat the forces which create the trend may tend to operatespasmodically or cyclically.Furthermore, it is evident that the secular trend may havequite a different significance according to the economic magnitudeconcerned. A gradual rise of the total volume of production.and ·consumption is the natural consequence of growthof population. An upward-sloping trend of physical quantitiesof production and consumption per head of the population is tijeessence of material progress due to the accumulation of capital