158 THE GENERAL THEORY OF EMPLOYMENT BK. IV

in the short run he is unsuccessful, which is verylikely, he will not receive much mercy. Worldlywisdom teaches that it is better for reputation to failconventionally than to succeed unconventionally.

(5) So far we have had chiefly in mind the state ofconfidence of the speculator or speculative investorhimself and may have seemed to be tacitly assumingthat, if he himself is satisfied with the prospects, he hasunlimited command over money at the market rate ofinterest. This is, of course, not the case. Thus wemust also take account of the other facet of the stateof confidence, namely, the confidence of the lendinginstitutions towards those who seek to borrow fromthem, sometimes described as the state of credit. Acollapse in the price of equities, which has had dis-astrous reactions on the marginal efficiency of capital,may have been due to the weakening either of speculat-ive confidence or of the state of credit. But whereasthe weakening of either is enough to cause a collapse,recovery requires the revival of both. For whilst theweakening of credit is sufficient to bring about acollapse, its strengthening, though a necessary conditionof recovery, is not a sufficient condition.

VI

These considerations should not lie beyond thepurview of the economist. But they must be relegatedto their right perspective. If I may be allowed toappropriate the term speculation for the activity of fore-casting the psychology of the market, and the termenterprise for the activity of forecasting the prospectiveyield of assets over their whole life, it is by no meansalways the case that speculation predominates overenterprise. As the organisation of investment marketsimproves, the risk of the predominance of speculationdoes, however, increase. In one of the greatest invest-ment markets in the world, namely, New York, the