The Processes of Business Revival in the Light of 1933 Conditions
The significance of business revival processes depends greatly upon what business is reviving from, and toward what future it is reviving. Ordinarily, a study of the processes of revival from a depression is important only because it helps one to figure the relative strength of the existing forces, and to forecast the timing; for ordinarily depressions are much the same, and the requirements for recovery are very similar. In the midst of the 1933 depression, however, the facts are in so much dispute that it is necessary to consider what we are reviving from. Furthermore, the processes are so involved in revolutionary schemes of collectivism and social control, that what we may be reviving for, is not at all clear. Under the "New Deal," the existence of economic laws or equilibria is not recognized, but in their place we have someone's wishes for a 1926 level, or someone's notions about " social justice." Seen in historical perspective, cycles when subjected to broad economic analysis, are very simple. (Only the selfish interests of politicians, and individuals whose opinions are perverted by personal losses, previous erroneous forecasts, etc., can keep one from recognizing this fact.) The plain facts are these. (1) Each business cycle starts with an upswing which develops into a boom. The cycle begins with a rising period, and the logical starting point is the "normal" or equilibrium level reached after recovery from the preceding depression. It follows that in 1933 we were still in the late phase of a cycle which began in 1927. (2) The peak, or the ultimate maximum of the cyclical rise, is fixed by the limits of disequilibrium. A moment's reflection makes it clear that no outstanding failure or "loss of confidence" would be fatal or terminate a boom, if conditions were sound. The striking phenomena which usually mark the period are not fortuitous, and are significant only as indicating the character of the maladjustments or disequilibria which are the real causes of the ensuing recession. The upper limit depends upon the force of the boom, the factors which facilitate expansion, the resistances to expansion, and the occurrence of any conjunctural events which may serve to precipitate these factors. In the case of all great wars government credit becomes so involved that facilitating factors are strengthened, and resistances are weakened, so that booms are apt to attain maximum proportions.