50 THE GENERAL THEORY OF EMPLOYMENT BK. II

with the building up or the depletion of stocks ofworking and liquid capital consequent on change.

An uninterrupted process of transition, such as theabove, to a new long-period position can be compli-cated in detail. But the actual course of events is morecomplicated still. For the state of expectation is liableto constant change, a new expectation being super-imposed long before the previous change has fullyworked itself out; so that the economic machine isoccupied at any given time with a number of over-lapping activities, the existence of which is due tovarious past states of expectation.

II

This leads us to the relevance of this discussionfor our present purpose. It is evident from the abovethat the level of employment at any time depends, in asense, not merely on the existing state of expectationbut on the states of expectation which have existedover a certain past period. Nevertheless past expecta-tions, which have not yet worked themselves out, areembodied in the to-day’s capital equipment with re-ference to which the entrepreneur has to make to-day’sdecisions, and only influence his decisions in so far asthey are so embodied. It follows, therefore, that, inspite of the above, to-day’s employment can be correctlydescribed as being governed by to-day’s expectationstaken in conjunction with to-day’s capital equipment.

Express reference to current long-term expecta-tions can seldom be avoided. But it will often besafe to omit express reference to short-term expectation,in view of the fact that in practice the process ofrevision of short-term expectation is a gradual and con-tinuous one, carried on largely in the light of realisedresults; so that expected and realised results run intoand overlap one another in their influence. For,although output and employment are determined by