Page:The Economics of Unemployment.djvu/69

and even salutary action. It is held to belong to the give and take, the elasticity of an economic system which requires periods of expansion and contraction as factors in a healthy life.

Finance, thus envisaged through its skilled manipulation of monetary power, principally credit, regulates industrial life, stimulating this trade or class of investment and checking another, so as to employ to the highest net advantage of economic society (and by some natural chain of coincidence the highest profits of financiers) the available forces of production. The economy of use of this stimulus, a sort of nervous energy, involves not merely its proper distribution as between trade and trade, country and country, but this periodicity of high and low functioning as a whole which comes out in high activity and depression. So the conception of cyclical fluctuation, found in actual industry, is fathered on to finance, and it is held that these financial fluctuations are similarly natural and inevitable.

How far is this assumption of the necessity of rhythmic fluctuations a mere begging of the question? One sees that they do happen and argues that they must. And, doubtless, other things unchanged, they must. But here we come once more to grips with our problem.

There is no ground for imputing any independent causation to credit as a factor in trade fluctuations. Its operation only quickens, exaggerates, and facilitates industrial changes that are otherwise produced. When after a depression trade revives, that revival, as we see, is immediately due to the recognition that