STATIC ECONOMICS AND BUSINESS FORECASTING 
Benjamin M. Anderson, Jr. 
THE economic theorist has devoted himself much too exclu- 
sively to the laws of completed equilibrium, to static theory so- 
called, to theory concerned with what prices and costs and the 
proportions of the productive forces would be if markets were 
Auid and if industry were in perfect balance. Business fore- 
casting, on the other hand, has been concerned much too exclu- 
sively with the sequence and flow of events, losing sight of the 
goal in watching the motions of the runners. 
The laws of economic equilibrium have been elaborately 
worked out in that great body of doctrine which associates itself 
with the names of Adam Smith and his followers. Landmarks 
in the history of this theory are Adam Smith, Ricardo, John 
Stuart Mill, J. B. Say, J. E. Cairnes, Menger, Bohm-Bawerk, 
Wieser, and John Bates Clark. These writers have worked out 
the laws of prices and costs. They have explained the laws gov- 
srning the return to the different productive forces, as land, labor, 
capital, and enterprise. They have explained the conditions 
governing the apportionment of the productive forces, land, labor, 
and capital, among different industries, and the conditions under 
which one or another of the productive forces will be transferred 
from one industry to another, from one part of the country to 
another, or even from one country to another. Ideas on these 
topics which were vague in Adam Smith’s discussion have become 
increasingly precise and quantitative with the refinement and 
polishing of the tools of the economist’s thought. And the beauti- 
ful application of the idea of “the margin,” particularly in the 
writings of Professor Clark, has made it possible to indicate 
not merely the conditions under which capital or labor will flow 
from one industry to another, but also, in principle, very precisely 
the point at which they will cease to flow. 
The idea of balance and proportion underlies the whole of the