Prosperity and Depression.pdf

274 Nature and Causes· oj" the Cycle Part IIinnovations (equipment of a 'country-with railroads) or newlydiscovered countries. 1 These forces may conceivably producea long wave in production and prices. But is not that a purelyfortuitous phenomenon? Is each of these long cycles the resultof the same type of force? 'Is there the slightest probabilitythat a cycle of fifty years or sq will always be produced? Arewe atalljustified in extrapolating these waves? Is there any sensein such statements as that the depression ofthe nineteen-thirties wasso severe because we were not only in the downgrade ofa short, butalso ofa long, wave? Why is it that periods which are under thespell of one ofthese long-range forces are themselves divided intoshorter periods of prosperity and depression? It would seemthat all these and other sceptical questions about the nature of thelong waves can be answered only after a fairly full insight intothe mechanism· of the short cycles has been attained. . For theforce.s which are said to produce the long waves do not workindependently of, and alternativdy to, those that produce theshort cycle. They work· through the latter-e.g., by tending toincrease continuously the supply of money (gold production),.or by continual creation of new investment opportunities (e.g.,railway development ofa country or rapid growthofits population).Until the working of the mechanism of the short cycle has beenexplored, the nature of the long waves cannot be understood.We are therefore compelled to attack first ofall the problem ofthebusiness cycle.§ 7. IS A GENERAL THEORY OF 'rHE CYCLE POSSIBLE ?Until now we have discussed the essential charac­Each cycle teristics ofthe business cycle-that is, those qualitiesan historical in the absence ofwhich the phenomenon " businessindividual. cycle" does not exist. Besides these, there is anendless variety ofchanges in all spheres ofeconomicand social life which, without being essential features ofthe cycle,are more or less regular concomitants of its progress. Theseconcomitant changes furnish the material which we have to seek1 Thi$ is Professor Schumpeter's hypothesis about the long waves.