Prosperity and Depression.pdf

Nature and CatlSes of the CyclePart IIThe second is the localisation of investment, credit and banking(imperfect mobility of capital). The third, perhaps the mostimportant, is national currency autonomy. Thus we have aseries of situations representing an increasingly close approachto reality. In.the discussion at each stage of approach, it will benecessary to make further distinctions in relation to what weconceive to be the distribution of resources (in the widest sense ofthe word) among the various "countries". It is the unevengeographical distribution of economic resources and activitiesthat gives the disintegrating factors their importance. If eacharea or country possessed all types of resources in sufficientquantity, the existence ofhigh transport costs between them wouldbe irrelevant.It goes without saying that some of these disintegrating factors-especially the first, but also the second to some extent-operate,not only between countries separated by political borders, butalso within p(,litical areas between different regions. When,~erefore, we speak simply of " countries ", the expression is tobe understood with the obvious qualifications implied by thecontext.§ 2. 'INFLUENCE OF TRANSPORT COSTS : IMPERFECT MOBILITYOFGOODSThe most natural and inevitable of all disintegratingfactors is the existence of costs of transport.Localisationofexpansion Costs of transport should be interpreted in a broadand sense as covering, not only the expenses involvedcontraction. in transferring goods between producers, or fromproducer to consumer, in different localities, butalso the trouble and expense involved in moving the consumerto the goods and services. It is assumed that resources are toa considerable extent localised, whether by nature or, in the caseof labour, by a multiplicity of causes. It should further be keptin mind that, at this stage ofthe argument" we still assume a unifiedmoney and credit system for the whole world.Given a certain geographical distribution of resources, theeffect of transport costs is to permit of cumulative upward and