Prosperity and Depression.pdf

344 Natllre and Callses of the Cycle Part nwould seem to be a fairly plausible assumption and·perhaps itmay even be somewhat relaxed without any fundamental changein the result.The 1:esult is the cumulative process of contraction through theinteraction of consumers' and producers' spending, throughthe operation of the acceleration principle and the dependence ofconsumers' purchasing power on gross investment (production ofproducers' goods).1 Expenditure on consumers' goods falls off.This in turn reacts violently on the production of producers'goods (acceleration principle). Demand for investible fundsshrinks. MV is reduced in one way or the other as describedin § 8 above. Income and expenditUre on consumption are.furthercurtailed, and so on. 21 This description of the dependence of Gonsumers' purchasing power,and through it of the activity in consumption industries, on investmentis analytically somewhat different from the use of the II Multiplier"concept by Kahn, Keynes and Harrod. But, substantially, the samething is referred to in both cases, and it can be said that the idea of themultiplier is more or less explicitly implied in any description of theU Wicksellian process".• How long this process will last before it is finally brought to an endwill be discussed below in Chapter I I, section B.