THE FOLLOWING pages present a hypothesis concerning factors contributing to a high inducement to invest in extended periods of economic expansion. It is recognized, of course, that any one hypothesis can at best claim to be taken into account in conjunction with many others when an interpretation of economic reality is attempted.
In business cycle theory it has been frequently maintained that the phenomenon appearing as general overproduction should be interpreted as surproduction généralisée rather than générale.1 Essentially this view represents an attempt to reconcile facts with Say's law: There exists no such thing as general overproduction, but partial overproduction may become "generalized" by giving rise to processes temporarily conveying the impression of general overproduction. Assume that there exists partial overproduction of Commodity A, and that this, in accordance with Say's law, is tantamount to partial underproduction of Commodity B. Resources should now be shifted from Section A to Section B of the economy. This takes time, however, and consequently production and employment as a whole will be curtailed for a period that should not be long, if the initiating causes themselves determined the entire____________________