314 LAW AND FREEDOM IN HISTORY

years by large capitalists, bankers and speculators In stocks. With this
extension in scope came a shift in the relative importance of the causes.
In the past the undermining of credit had usually been caused by war, by
the making of peace, or by some violation of financial obligations on the
part of Government. In the future it was to be caused more frequently by
stresses engendered within the world of business itself. The reason for
both changes lay in the gradual extension of the highly organised business
enterprise from, its earlier centres of foreign commerce, mining, finance,
and banking over the wide field of manufacturing and domestic trade—an
extension that accompanied the Industrial Revolution. ... In proportion
as the Industrial Revolution and its concomitant changes in the organisa-
tion of commerce and transportation spread to other countries, the latter
began to develop the phenomena of business cycles already familiar in
England.'1

'It is ... clear that the booms and slumps occurred at the same time, or
almost the same time, in all industrialised countries and in the less
developed areas connected with these by trade.'2

'Dans le monde, par extensification geographique, cornme dans la nation,
par penetration des spheres d'activite" les moins industrielles, les spasmes
de la conjoncture tendent k gagner du terrain et a se synchroniser.'3

In an oecumenical economy of Western origin in which Industry had
established its ascendancy over Agriculture and in which this new-
fangled predominantly industrial way of economic life had spread from
its Western birthplace all over the face of the planet, the distinctive
feature in the rhythm of economic activity was its autonomy.

'The waning, like the waxing, of prosperity . . . must be due, not to the
influence of "disturbing causes" from outside, but to processes that run
regularly within the world of business itself.'4

'The mysterious thing about [these fluctuations] is that they cannot be
accounted for by such "external" causes as bad harvests due to weather
conditions, diseases, general strikes, lock-outs, earthquakes, the sudden
obstruction of international trade channels and the like. Severe decreases
in the volume of production, real income, or level of employment as a
result of crop failures, wars, earthquakes, and similar physical disturbances
of the productive processes rarely affect the economic system as a whole,
and certainly do not constitute depressions in the technical sense of
business-cycle theory. By depressions in the technical sense we mean those
long and conspicuous falls in the volume of production, real income, and
employment which can only be explained by the operation of factors
originating within the economic system itself, and in the first instance by
an insufficiency of monetary demand and the absence of a sufficient margin
between price and cost.'5

'For various reasons it seems desirable, in the explanation of the
business cycle, to attach as little importance as possible to the influence of
external disturbances, . . . The responses of the business system seem
prima .facie more important in shaping the business cycle than external
shocks. Secondly, historical experience seems to demonstrate that the
cyclical movement has a strong tendency to persist, even where there are

1 Mitchell, W. C.: Business Cycles and their Causes, a new edition of Mitchell's
Business Cycles, Part III (Berkeley, Cal. 1941, University of California Press), pp. 170-1.

2 Ashton, loc. cit.

3 DupriezjL. H.: Les Mouvements ficonomiques Gtlnfraux (Louvain 1947, Institut de
Recherches Economiques et Sociales, 2 vols.)} vol. ii, p. 542.

4 Mitchell, ibid., p. 26. Cf. pp. 2 and 71. s Haberler, op. cit., p. 265.