Prosperity and Depression.pdf

I%. AnalYsis of Theories Part Idaily comments of economists, politicians and economic journalson contemporary events)~ this must not be taken to imply that, inour opinion, or in the opinion of the writers whose theories arereviewed, these factors do not influence the economic situation.Our object is in the first instance to isolate the responses of theeconomic system, in order to stage the scene and to describe theenvironment in which the external influences have play.§ 2.. METHOD OF THE FOLLOWING ANALYSISThe scope of the following analysis of theoriesPrinciples has been defined in the Introduction (page 1).1of selection. The method followed in the exposition isthereby largely determined. No attempt has beenmade to. present the various theories in chronological orderor to picture the·theoretical and sociological background of thevarious writers (except in so far· as it may have been necessary inorder to elucidate their doctrines). It has been preferred to presentthe theories in a systematic order, beginning (so far as possible)with the less complicated and proceeding thereafter to the morecomplicated. Frequently it happens that the latter cover all thefactors on which the former lay stress, while drawing attentionto others which the former have overlooked or treated as irrelevantor put aside by means of a convenient simplifying assumption(e.g., by. a ceteris paribus clause).It has been necessary to select certain authors or certain worksas illustrative of the various lines of thought. Preference hasbeen given, where there was no reason to the contrary, to the morerecent and more accessible works. No attempt has been made totrace every thought or hypothesis back to its origin in the historyof economic doctrines.1 This special purpose explains the difference between the followingexposition and the classification of theories and theorists given in suchworks as A. H. Hansen : Business Cycle Theories, Boston, 1927 ; W. M.Persons : " Theories of Business Fluctuations" (Quarterl)' Journal ojEconomics, Vol. 4I, reprinted in Forecasting Business Cycles, New York,1931) ; F. A. Hayek: lv[onetafy Theory and the Trade Cycle, London,1933 ; Macfie : Theories ot the Trade Cycle, London, 1934.