CHAPTER I 

 INTRODUCTION 



There is a considerable unanimity of opinion among 

 experts that, from the purely economic point of view, 

 the most general and characteristic phenomenon of a 

 changing society is the ebb and flow of economic life, 

 the alternation of energetic, buoyant activity with a 

 spiritless, depressed and uncertain drifting. During the 

 creative period of the rhythmic change each factor in 

 production receives an augmenting income, and the 

 mutual adjustment of interests in the productive 

 process is brought about in a natural way, primarily 

 through the operation of competitive law. The period 

 of decline in the cycle presents a sharply contrasted 

 aspect of industry. With the organization of capital 

 and labor at first unchanged, the amount of the product 

 falls; each of the interested factors seeks at least to 

 retain its absolute share of the product; friction and 

 strife ensue with a threatening of the disruption of 

 industry. What is the cause of this alternation of 

 periods of activity and depression? What is its law? 

 These are the fundamental problems of economic 

 dynamics the solution of which is offered in this Essay. 



Political Economy began to make progress in a 

 rational way when the Physiocrats put forth their 



doctrine of the dependence of all forms of economic life 



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