Economic essays

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Identifikator:: 1753623200

URN:: urn:nbn:de:zbw-retromon-136107

Document type:: Monograph

Title:: Economic essays

Place of publication:: New York

Publisher:: Macmillan

Year of publication:: 1927

Scope:: viii, 368 S.; Ill., graph. Darst.

Digitisation:: 2021

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: Static economics and business forecasting / Benjamin M. Anderson, Jr.

Collection:: Economics Books

STATIC ECONOMICS AND BUSINESS FORECASTING 9 forces are tending is certainly much better informed than the man who does not know what the goal is, but merely knows that change is taking place and that some things change first and others later. Not all students of static economics have been neglectful of the laws of change. John Stuart Mill undertakes an analysis of the phenomena of prosperity, crisis, and depression which, con- sidering the time at which he wrote is marvelously realistic. Pro- fessor Clark has been keenly interested in the problems of dynamics, while Joseph Schumpeter * has developed an interest- ing theory of business crises which rests the whole story in the sharp contrast between static and dynamic tendencies. The business cycle for Schumpeter starts in a static equilibrium in which costs are proportionate to prices, industry is in balance, and the general range of economic activities is understood by those who take part in it. As a consequence, in such a situation business calculations are easily made and, assuming no Iarge changes in the course of events, are accurately made. Then comes a dominating personality, the undertaker, with a new plan. Backed by new bank credit, created by the banker who believes in him, he goes into the market, whips control of labor and supplies from the hands of men engaged in production along old lines, and starts his new enterprise. He is successful. Others seeing his success follow him. The movement toward new ways of doing things grows and is overdone. There is a disturbance in the equilibrium of prices and costs. Men working on old lines find their costs increasing and perhaps their markets dwindling. Others may find that the changes work to their advantage. But in any case the equilibrium is broken and the situation is changed. The calculations and plans which had been made earlier, even if accurately made on the basis of the data at the time they were made, cease to be applicable since the data themselves have changed. Finally there comes a time when it is necessary to pause, to take stock, to readjust. The crisis comes which “holds court over values and prices” and brings hopes and aspirations face to face with reality. The crisis is a process of “statification,” a process of restoring the static equilibrium which the preceding period of prosperity and change had broken. When the static equilibrium is restored, the upward movement can begin again. * Theorie der Wirtschaftlichen Entwicklung.

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