第21章

Thisvisibledifferencebetweentheoldorderandthenewiscloselydependentonthedifferencebetweenthepurposesthatguidetheolderschemeofeconomiclifeandthoseofthenew。 Undertheoldorder，industry，andevensuchtradeastherewas，wasaquestoflivelihood；undertheneworderindustryisdirectedbythequestofprofits。Formerly，therefore，timesweregoodorbadaccordingastheindustrialprocessesyieldedasufficientoraninsufficientoutputofthemeansoflife。 Latterlytimesaregoodorbadaccordingastheprocessofbusinessyieldsanadequateorinadequaterateofprofits。Thecontrollingendisdifferentinthepresent，andthequestionofwelfareturnsonthedegreeofsuccesswithwhichthisdifferentulteriorendisachieved。Prosperitynowmeans，primarily，businessprosperity；whereasitusedtomeanindustrialsufficiency。 Atheoryofwelfarewhichshallaccountforthephenomenaofprosperityandadversityunderthemoderneconomicordermust，accordingly，proceedonthecircumstanceswhichconditionthemodernsituation，andneednotgreatlyconcernitselfwiththerangeofcircumstancesthatmadeormarredthecommonwelfareundertheolderregime，beforetheageofmachineindustryandbusinessenterprise。(1*)Undertheoldorder，whenthoseinwhosehandslaythediscretionineconomicaffairslookedtoalivelihoodastheendoftheirendeavors，thewelfareofthecommunitywasregulated“bytheskill，dexterity，andjudgmentwithwhichitslaborwasgenerallyapplied。“(2*)WhatwouldmarthiscommonwelfarewastheoccasionallydisastrousactofGodinthewayofunpropitiousseasonsandthelike，ortheactofmaninthewayofwaranduntowardgovernmentalexactions。Pricevariations，exceptasconditionedbytheseuntowardintrusiveagencies，hadcommonlyneitherawidenoraprofoundeffectupontheevencourseofthecommunity’swelfare。Thisholdstrue，inageneralway，evenafterresorttothemarkethadcometobeafactofgreatimportanceinthelifeoflargeclasses，bothasanoutletfortheirproductsandasabaseofsuppliesofconsumablegoodsorofrawmaterials，-asinthebetterdaysofthehandicraftsystem。 Untilthemachineindustrycameforward，commerce(withitshandmaiden，banking)wastheonlybranchofeconomicactivitythatwasinanysensibledegreeorganizedinacloseandcomprehensivesystemofbusinessrelations。“Business“wouldthenmean“commerce，“andlittleelse。Thiswastheonlyfieldinwhichmenhabituallytookaccountoftheirowneconomiccircumstancesintermsofpriceratherthanintermsoflivelihood。Pricedisturbances，evenwhentheywereofconsiderablemagnitude，seemtohavehadgraveconsequencesonlyincommerce，andtohavepassedoverwithoutbeingtransmittedmuchbeyondthecommercialhousesandthefringeofoccupationsimmediatelysubsidiarytocommercialbusiness。 Crises，depressions，hardtimes，dulltimes，brisktimes，periodsofspeculativeadvance，“erasofprosperity，“areprimarilyphenomenaofbusiness；theyare，intheiroriginandprimaryincidence，phenomenaofpricedisturbance，eitherofdeclineoradvance。Itisonlysecondarily，throughthemediationofbusinesstraffic，thatthesemattersinvolvetheindustrialprocessorthelivelihoodofthecommunity。Theyaffectindustrybecauseindustryismanagedonabusinessfooting，intermsofpriceandforthesakeofprofits。Solongasbusinessenterprisehabituallyranitscoursewithincommercialtrafficproper，apartfromtheindustrialprocessassuch，solongtheserecurringperiodsofdepressionandexaltationbeganandendedwithinthedomainofcommerce。(3*)Thegreatestfieldforbusinessprofitsisnowafforded，notbycommercialtrafficinthestrictersense，butbytheindustriesengagedinproducinggoodsandservicesforthemarket。Andtheclose-knit，far-reachingarticulationoftheindustrialprocessesinabalancedsystem，inwhichtheinterstitialadjustmentsaremadeandkeptintermsofprice，enablespricedisturbancestobetransmittedthroughouttheindustrialcommunitywithsuchcelerityandeffectthatawaveofdepressionorexaltationpassesoverthewholecommunityandtoucheseveryclassemployedinindustrywithinafewweeks。Andsomewhatinthesamemeasureastheseveralmodernindustrialpeoplesareboundtogetherbythebusinesstiesoftheworldmarket，dothesepeoplesalsoshareincommonanywaveofprosperityordepressionwhichmayinitiallyfalluponanyonememberofthisbusinesscommunityofnations。Exceptionsfromthisrule，ofcourse，aresuchperiodsofprosperityordepressionasresultfromlocal(material)accidentsoftheseasonsandthelike，-accidentsthatmayinflictupononecommunityhardshipswhichthroughthemediationofpricesaretransmutedintogainfortheothercommunitiesthatarenottouchedbythecalamitousactofGodtowhichthedisturbanceisdue。 Thetrue，orwhatmaybecalledthenormal，crises，depressions，andexaltationsinthebusinessworldarenottheresultofaccidents，suchasthefailureofacrop。Theycomeintheregularcourseofbusiness。Thedepressionandtheexaltationareinameasureboundtogether。Intherecentpast，sincedepressionandexaltationhavebeennormalfeaturesofthesituation，everystronglymarkedperiodofexaltation(prosperity)hashaditsattendantperiodofdepression；althoughitdoesnotseemtofollowinthenatureofthingsthatawaveofdepressionnecessarilyhasitsattendantreactioninthewayofaperiodofbusinessexaltation。Intherecentpast-thelasttwentyyearsorso-ithasbeenbynomeansanomaloustohaveaperiodofhardtimes，orevenafairlypronouncedcrisis，withoutawaveofmarkedexaltationeitherprecedingorfollowingitinsuchclosesequenceasconvenientlytoconnectthetwoasactionandreaction。Butitwouldbeamatterofsomeperplexitytoastudentofthisclassofphenomenatocomeuponawaveofmarkedbusinessexaltation(prosperity)thatwasnotpromptlyfollowedbyacrisisorbyaperiodofdepressionmoreorlesspronouncedandprolonged。Indeed，astheorganizationofbusinesshasapproachedmoreandmorenearlytotherelativelyconsummatesituationofto-day，-sayduringthelasttwentyyearsofthenineteenthcentury，-periodsofexaltationhave，onthewhole，grownlesspronouncedandlessfrequent，whereasperiodsofdepressionor“hardtimes“havegrownmorefrequentandprolonged，ifnotmorepronounced。Itmightevenbeatenablegeneralization，thoughperhapsunnecessarilybroad，tosaythatforacoupleofdecadespastthenormalconditionofindustrialbusinesshasbeenamildbutchronicstateofdepression，andthatanymarkeddeparturefromcommonplacedulltimeshasattractedattentionasaparticularcasecallingforaparticularexplanation。Thecauseswhichhavegivenrisetoanyoneofthemorepronouncedintervalsofprosperityduringthepasttwodecadesarecommonlynotverydifficulttotrace；butitwouldbeabootlessquesttogooutinsearchofspecialcausestowhichtotracebackeachoftheseveralperiodsofdulltimesthataccountforthegreaterportionofthepastquarterofacentury。 Underthemorefullydevelopedbusinesssystemasithasstoodduringthecloseofthecenturydulltimesare，inaway，thecourseofnature；whereasbrisktimesareanexceptionalinventionofmanorararebountyofProvidence。 Whatcurrenteconomictheoryhastosayonthecommonwelfareismorefrequentlyfoundunderthecaptionofcrisisanddepressionthaninanyotheroneconnection。Andthetheoryofcrisisanddepressionhas，asiswellknown，beenoneofthelesshappypassagesintheeconomists’repertoryofdoctrines。Ithasbeencustomarytoapproachtheproblemfromthesideoftheindustrialphenomenainvolved-themechanicalfactsofproductionandconsumption；ratherthanfromthesideofbusinessenterprise-thephenomenaofprice，earnings，andcapitalization。Thisuntowardaccidentofafalsestartisprobablyaccountableforthefactthatnotenabletheoryofthesephenomenahasyetbeenoffered。Thesolutionsattemptedhavecommonlyproceededbyananalysisofindustriallifeapartfrombusinessenterprise；thatistosay，theyhavesoughttoexplaintheoccurrenceofcrisesunderthatold-fashioned“naturaleconomy“or“moneyeconomy“underwhichcrisesdidnotnormallyoccur。(4*) Takingasapointofdeparturethepatentfactthatcrises，depressions，andbrisktimesareintheirfirstincidencephenomenaofbusiness，ofpricesandcapitalization，anexplanationoftheirappearanceanddisappearance，andoftheirbearinguponthecommonwelfare，maybesoughtbyharkingbacktothosebusinessprinciplesthatunderliemoderncapitalisticenterprise。Ananalysisofthecurrent，common-sensebusinessviewsofpriceandinvestmentshouldindicatethegenesisandmannerofgrowthofthesemassmovementsofthebusinesscommunity，aswellasthecharacterofthosecircumstanceswhichmayfurtherorinhibitsuchmovements。Businessdepressionandexaltationare，atleastintheirfirstincidence，ofthenatureofpsychologicalfact，justaspricemovementsareapsychologicalphenomenon。 Theeverydaycircumstanceswhichconditionthemodernbusinessmanagementofindustryaresufficientlywellknown，andtheyhavealreadybeenreviewedinsomedetailinearlierchapters；buttheymayperhapsadvantageouslybeoutlinedagaininsofarastheybearimmediatelyonthequestioninhand。 Industryiscarriedonbymeansofinvestment，whichismadewithaviewtopecuniarygain(theearnings)。Thebusinessman’sendeavorsinmanagingtheaffairsoftheconcerninwhichinvestmenthasbeenmadelooktothesameend。Thegainsarekeptaccountofasapercentageontheinvestment，andboththeyandtheindustrialplantorprocessthroughthemanagementofwhichtheyareprocuredarecountedintermsofmoney，and，indeed，innootherterms。Theplantorprocess(ortheinvestment，whateverformittakes)iscapitalizedonthebasisofthegainswhichaccruefromit，andthiscapitalizationproceedsonthegroundaffordedbythecurrentrateofinterest，weightedbyconsiderationofanyprospectivechangeintheearning-capacityoftheconcern。Themanagementoftheconcerniseffectedbyamoreorlessintricateandmultifarioussequenceofbargains。Thedecisiveconsiderationateverypointinthistrafficofinvestmentandadministrationistheconsiderationofpriceinonerelationoranother。 Theindustrytowhichthebusinessmeninthiswayresortasthewaysandmeansofgainisofthenatureofamechanicalprocess，oritissomeemployment(ascommerceorbanking)thatiscloselyboundupwiththemechanicalindustries。Broadly，itissuchindustryasliesunderthedominionofthemachine，inthatitisinvolvedinthatcomprehensivequasi-mechanicalprocessofmodernindustriallifethathasbeendiscussedinanearlierchapter。Thisimplicationofeachindustryinacomprehensivesystem，orthisarticulationwithotherbranchesofindustry，isofsuchanatureastoplaceeachindustrialconcernindependenceononeormoreotherbranchesofindustry，fromwhichitdrawsitsmaterials，appliances，etc。，andtowhichitdisposesofitsoutput；andtheserelationsofdependenceandarticulationformanendlesssequence。Thatistosay，theinterindustrialrelationsintowhichanybranchofindustrynecessarilyentersdonotruntoafinalterminanydirection； withintheprocessofindustryatlargethereisnomemberthatstandsintherelationofaninitialtermtoanysequenceofprocesses。Theramificationofindustrialdependenceiswithoutlimits。Themethodoftheserelationsofoneconcerntoanother，orofonebranchofindustrytoanother，isthatofbargaining，contractsofpurchaseandsale。Itisapecuniaryrelation，inthelastresortapricerelation，andthebalanceofthissystemofinterstitialrelationsisapricebalance。 Theseinterstitialpecuniaryrelations，betweentheseveralconcernsorbranchesofindustrythatmakeupthecomprehensiveindustrialsystematlarge，involvecreditrelationsofgreaterorlessduration。Thebargaining，bymeansofwhichindustryismanagedandtheinterstitialrelationsadjusted，takestheformofcontractsforfutureperformance。Allindustrialconcernsofappreciablesizeareconstantlyinvolvedinsuchcontracts，whichare，onanaverage，ofconsiderablemagnitudeandduration，andcommonlyextendinseveraldirections。Thesecontractsmaybeofthenatureofloans，advances，outstandingaccounts，engagementsforfuturedeliveryorfutureacceptance，butinthenatureofthecasetheyinvolvecreditobligations。Credit，whetherunderthatnameorunderthenameoforders，contracts，accounts，andthelike，isinseparablefromthemanagementofmodernindustryinallthatconcernstheworkingrelationsbetweenbusinessesthatarenotunderoneownership，orbetweenwhichtherelationsrestingonseparateownershiphavenotbeenplacedinabeyancebysomesuchexpedientaslease，pool，syndicate，trustagreement，andthelike。Creditrelationsofonekindandanotherarealsofoundexpedientandprofitableatmanypointswheretheiremploymentisnotpreciselyunavoidable。Theseextendedcreditrelationsarerequisitetothemostexpeditiousandprofitableconductofbusiness，andsotothehighestdegreeofsuccessofthebusiness。Undertheregimeofthemachineindustryandmodernbusinessmethodsitisprobablyfairtosaythattheuseofcredit，apartfromloancapitalandleases，unavoidablygoestotheextentrequiredtocoverallgoodsinprocessofelaboration，fromtherawmaterialtothefinishedgoods，insofarasthegoodschangehands(inpointofownership)duringtheprocess。 Theconductofindustrybycompetingbusinessconcernsinvolvesanextensiveuseofloancredit，asspokenofinChapterVabove。 Thefourconditionsrecitedarecharacteristicfeaturesofthatrecentpastduringwhichbrisktimes，crises，anddepressionsfollowedoneanotherwithsomeregularityasincidentsofthenormalcourseofbusiness。(5*)Certainqualificationsofthischaracterizationarenecessarytofittheimmediatepresent。Thesewillbeindicatedpresently。