II

INFLATION AND DEFLATION

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figure as has occurred in the past year. Hencethe magnitude of the catastrophe.

The time which elapses before productionceases and unemployment reaches its maximumis, for several reasons, much longer in the caseof the primary products than in the case ofmanufacture. In most cases the productiveunits are smaller and less well organised amongstthemselves for enforcing a process of orderlycontraction; the length of the productionperiod, especially in agriculture, is longer; thecosts of a temporary shut-down are greater;men are more often their own employers andso submit more readily to a contraction of theincome for which they are willing to work; thesocial problems of throwing men out of employ-ment are greater in more primitive communities;and the financial problems of a cessation of pro-duction of primary output are more serious incountries where such primary output is almostthe whole sustenance of the people. Never-theless we are fast approaching the phase inwhich the output of primary producers will berestricted almost as much as that of manu-facturers; and this will have a further adversereaction on manufacturers, since the primaryproducers will have no purchasing powerwherewith to buy manufactured goods; andso on, in a vicious circle.

In this quandary individual producers baseillusory hopes on courses of action which wouldbenefit an individual producer or class of pro-ducers so long as they were alone in pursuing

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