The Kinetic Theory of Economic Crises 75 



sation. Doubtless low profits often drive producers on to plunge 

 deeper into production ; but there is nothing- inherent in the "cap- 

 italistic system" to produce this effect. The lack of proper adjust- 

 ment of the psychic to the materialistic conjuncture is the- 

 fundamental cause, a cause that is deeply implanted in human 

 nature, far deeper than political policies ; and from this evil even 

 the socialistic state could be free only on the hypothesis that it 

 had wiser leaders than those that now are found within the 

 psycho-financial circuit, or on the other more probable hypothesis 

 that the socialistic state did not advance at all. 



The retirement of the psycho-financial classes after the crisis, 

 and their preoccupation in the inter-adjustment of their obliga- 

 tions, amounts to a total withdrawal of the reenforced and reac- 

 tionary stimulus which they had supplied to industry. This must 

 now jog on for a while, as best it may, with merely the stimulus 

 of the simple, primary current ; and while there is not probably 

 any great reduction in the total mass of production, below at 

 least the recent average, there is a decided falling off in those 

 industries that have recently been especially favored. Thus, from 

 1883 (crisis) to 1884 the tonnage constructed in English ship- 

 yards fell from 892,216 to 588,274 and even to 331,528 in 1886. 



The essential features of the theory of economic crises are : 



I. Crisis phenomena are normal and kinetic. Their proximate 

 causes act in obedience to laws of motion and change. A thor- 

 ough study of crises will give to laws of that character a much 

 greater prominence in economic theory than they have hitherto 

 claimed or attained. It will be recognized that the theory of the 

 state of progress is as important as the theory of the stationary 

 state. The latter theory, however, is necessary to the former. 

 In order to apprehend a law of change, we must first crowd into 

 a given space of time as many stages as possible, each of which 

 momentarily presents itself as stationary. 



II. Since economy is the satisfaction of wants, it consists in 

 the furnishing of relatively material objects for the use of a rela- 

 tively spiritual subject. Consequently progress must consist in 

 an elevation of this relation in the psychic scale: the subject and 

 the object must both become more psychic, while preserving 



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