Economic essays

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Monograph

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

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

Collection:: Economics Books

STATIC ECONOMICS AND BUSINESS FORECASTING 11 making great profits and others are having difficulties or incurring losses, fills him with concern. He wishes his own portfolio to be well-balanced and diversified. Static economic theory he usually does not know by name, but the generalizations of static eco- nomic theory he grasps readily. He is interested in balance and proportion and equilibrium. Many of the best students of business forecasting have recog- nized very frankly their debt to general economic theory and their dependence upon it. Mr. Ray Vance, for example, in a recent book states very explicitly that the business forecaster must be an economist first and a statistician second, that statistical investigations must be guided by economic theory. Professor Wesley C. Mitchell, whose contributions to business forecasting are greater than those of any other single man, gives evidence in almost every part of his work of his knowledge of and dependence upon economic theory, static economic theory, and the equilibrium notion. His Business Cycles could not have been written by a man who was not deeply learned in this body of doctrine. He does not find use for the expression “the static state.” * But his interpretation of the business cycle constantly employs equilibrium notions. The period of prosperity generates abnormalities, stresses and strains. Costs get out of proper rela- tions to prices. There are great inequalities in the rise of costs and prices. Various other abnormalities occur, such as shortages ! Professor Mitchell says (Business Cycles, page 86): “One who turns from reading economic theory to reading business his- tory is forcibly impressed by the artificiality of all assumptions of a ‘static’ or even a ‘normal’ condition in economic affairs. For, despite all efforts to give technical meanings to these ambiguous terms, they suggest the idea of an unchanging order, or of an order which economic principles are always tending to re-establish after every aberration. But a review of business annals never discloses the existence of a ‘static’ or a ‘normal’ state in either of these senses. On the contrary, in the real world of business, affairs are always undergoing a cumulative change, always passing through some phase of a business cycle into some other phase. Prosperity is relapsing into depression, or becoming more intense, or breeding a crisis; a crisis is degenerating into a panie, or subsiding into depression; depres- sion is becoming deeper, or merging into a revival of prosperity. In fact, 1 Roya theory, a state of change in business conditions is the only ‘normal’ I agree with this paragraph, but I do not believe that it touches the heart of the matter. The static concept in economics should not imply either that business does not change or that business in its periodical changes recurs to an identical situation. The static concept is merely a methodological device for isolating and analyzing a highly important body of economic tendencies, an understanding of which is necessary for any realistic study of economic processes.

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