A Contribution to the Theory of the Trade Cycle

A Contribution to the Theory of the Trade Cycle

A Contribution to the Theory of the Trade Cycle

A Contribution to the Theory of the Trade Cycle

Excerpt

The title of this book is at once a claim and a disclaimer. I do believe that the argument which I am going to set out is quite likely to be the main part of the answer to the great question with which I am concerned--why it is that these rather regular fluctuations in trade and industry have gone on occurring, from the beginnings of industrialism up to the present. That is claim enough; but I want to make it clear at the outset that I am not claiming any more. I am not by any means positive that the answer which I have found is the right answer; one cannot begin to be sure of that until one has tested one's theory against the facts, and I am well aware that any testing which I have been able to do has been extremely superficial. If the theory which is here offered stands up to theoretical criticism, the next stage will be the concern of statisticians, econometrists, and (most of all) economic historians, who will have to see whether it does prove possible to make sense of the facts in the light of these hypotheses. All I hope to have shown is that the theory is reasonable in itself, and that it would serve to explain the kind of phenomenon which has been experienced.

Even on the purely theoretical side, I am very conscious that much remains to be done. If a provisional answer is given to the main question, that answer raises further questions, and many of these are left unexplored. The main argument itself has got some weak links, which need strengthening. But there are plenty of people whose hands will itch to get on with these jobs. At the point where I leave it, the inquiry looks like branching out in many directions. That is a good point at which to write a progress report, which is all that this 'contribution' claims to be.

What I have not felt inclined to do, on the basis of a theory which is little more than an untested hypothesis, is to make much in the way of policy prescriptions; while the diagnosis is still unconfirmed, it is early to think of cures. Of course cures will be tried, are being tried, and must be tried; but on the track I am following, the time for confident prescription still . . .

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