3 18 THE GENERAL THEORY OF EMPLOYMENT bk. vi

negative. But the interval of time, which will have toelapse before the shortage of capital through use, decayand obsolescence causes a sufficiently obvious scarcityto increase the marginal efficiency, may be a somewhatstable function of the average durability of capital ina given epoch. If the characteristics of the epoch shift,the standard time-interval will change. If, for example,we pass from a period of increasing population into oneof declining population, the characteristic phase of thecycle will be lengthened. But we have in the above asubstantial reason why the duration of the slump shouldhave a definite relationship to the length of life ofdurable assets and to the normal rate of growth in agiven epoch.

The second stable time-factor is due to the carrying-costs of surplus stocks which force their absorptionwithin a certain period, neither very short nor verylong. The sudden cessation of new investment afterthe crisis will probably lead to an accumulation ofsurplus stocks of unfinished goods. The carrying-costsof these stocks will seldom be less than io per cent,per annum. Thus the fall in their price needs to besufficient to bring about a restriction which providesfor their absorption within a period of, say, three to fiveyears at the outside. Now the process of absorbingthe stocks represents negative investment, which is afurther deterrent to employment; and, when it is over,a manifest relief will be experienced.

Moreover, the reduction in working capital, whichis necessarily attendant on the decline in output on thedownward phase, represents a further element of dis-investment, which may be large; and, once the recessionhas begun, this exerts a strong cumulative influence inthe downward direction. In the earliest phase of atypical slump there will probably be an investment inincreasing stocks which helps to offset disinvestment inworking-capital; in the next phase there may be a shortperiod of disinvestment both in stocks and in working-