CH. 19

ASPECTS OE THE CREDIT CYCLE

295

out of the loss of output due to involuntary unemploy-ment (which is a greater evil than the overtime of thebooms is a benefit). Not nearly enough weight isgenerally given to this great loss of wealth during aDeflation ascribable partly to the loss of savings andpartly to the involuntary idleness of the factors ofproduction. A policy of monetary management whichengineered a Commodity Inflation from time to timewhen it seemed that voluntary savings were insufficient,without ever allowing the reaction of a Deflation tofollow, m i ght indeed do good. But this would not bea Cyclical Inflation. If we are to have general rulesrelating to Credit Cycles, it seems unlikely that ageneral rule in their favour would be advantageouson balance.

Secondly, some weight must be given to considera-tions of social justice. In a Commodity Inflation theearnings of the factors of production are worth lessthan what they are producing, and the difference isarbitrarily distributed amongst the members of theentrepreneur class as a permanent addition to thelatter’s wealth ; for they can usually secure more ofthe gains of the Inflation than they suffer of the lossesof the Deflation. This forced and arbitrary transfer-ence of the ownership of the results of effort is in itselfa considerable evil.

There are, however, certain secondary argumentswhich can be used to support Mr. Robertson’s generalposition as follows:

(i.) In a progressive society, and indeed in a societywhich is subject to change of any kind, the instrumentof temporary inflation may sometimes be a necessaryone to secure the change-over from one type of pro-duction to another with the desirable degree of rapidity.In a Socialist system which was directed with perfectknowledge and wisdom, the diversion of productiveresources could be effected by fiat. But in an indi-vidualist system this is not possible. Resources will