Investment and Business Cycles

Investment and Business Cycles

Investment and Business Cycles

Investment and Business Cycles

Excerpt

We live in a money world. Nearly all our economic activities are carried on with money and are measured in money terms. This fact is so obvious that it is commonly taken for granted and then ignored, with little understanding or study of its true significance. Yet the whole economic character of the principal Western democratic countries of today is dominated by the role money plays in them. In largest part, production is not undertaken to meet the producer's own needs directly, but is undertaken in return for money, or the promise or hope thereof. In largest part, consumption is not consumption of the consumer's own output, but of other things he has bought with money. Exchanges are primarily exchanges of goods and services for money, not for one another. He who would save must chiefly save money, not the physical products of his own labor; and he who would invest must first command money, not materials or men. Real income, enjoyment, power, position, lands--anyone who wants them must obtain them, for the most part, by first acquiring title to money.

The modern money economy is only one of a number of possible methods of organizing the production and consumption activities of large groups of people who are economically dependent upon one another. An alternative method that was successful in the past was the method of the Egyptian and Roman Empires, which rested on a very stable admixture of social and political status, armed force and slavery. Another was the method of feudalism, which held people together in smaller but still substantial groups through a not wholly dissimilar blend of hierarchical status and force. Still another is the method of Soviet Russia today, which in somewhat varying degree has . . .

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