THE TRADE CYCLE.
Mn. LAYINGTON'S 'little book on The Trade Cycle (P. S. King, 3s. 6d. net) deserves careful reading. In his " account of the causes producing rhythmical changes in the activity of business " he is reluctant to attribute the present spell of had trade wholly to the War. Like the .boom of 1919, the slump of 192122 was, he thinks, part of a cyclical movement •such as we have often experienced at more or less regular intervals of perhaps eight years. We may indicate the nature of his analysis of a trade cycle by saying that he lays stress on the psychological element —the abounding confidence of manufacturers, merchants and investors when trade is rapidly improving and their exaggerated gloom when trade is falling away. If the wave did not rise so high, the depression that followed would not be so deep. Mr. La.vingten suggests that trade booms might be kept within reasonable limits, first by a more rapid readjustment of wages to prices in good as well as in bad times and secondly by still greater caution on the part of the banks, who might restrict their loans 'during periods of rising business activity and thus prevent prices from soaring, to the delight of the thoughtless speculator. The policy is easier to outline than to enforce, but it must be remembered that the great banks have in recent years "done much to lessen the intensity of the course of business cycles in this country." The author deals briefly with the attacks made on "the capitalist system," because it is subject to occasional spells of misfortune. He points out that no alternative method of conducting business offers any guarantee of efficiency and that even if we had a Socialist system we should suffer from fluctuations due to changes in foreign countries over which we had no control. Further, he shows that in the twenty years ending with 1907, during which two trade cycles ran their course, the average amount of unemployment in our chief industries was less than 6 per cent. " The question whether this figure indicates success or failure must be judged with refer- ence to the magnitude of the problem of industrial organization which is involved." Certainly the Bolsheviks have not come anywhere near finding profitable employment for so large a proportion of the working classes in Russia. Unemployment is exceptionally great in this country just now, partly because many of our foreign customers are impoverished and partly because the war wages were not readjusted giddily enough to peace conditions. But it is probable that much harm was done by the undue prolongation of the semiSocialiatic State control instituted during the War. which tended to maintain prices at an artificially high level and delayed the =tutu to normal conditions.
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