Here we are upon the threshold of one of the most striking and formidable of economic facts, the regular alternation of periods of good and bad trade, each very widespread, if not world-wide, in its range, each comprising certain regular phases of acceleration and decay, and each infallibly yielding sooner or later to the other.  The details of these phenomena are highly complex, some of them obscure; an immense literature has already been devoted to the subject, yet its systematic study is hardly more than begun.  The account given in the preceding paragraph is incomplete and meagre.  It is inserted here in the hope that it will impress the reader with a sense both of the fact of these alternations and of the deeply rooted nature of the causes from which they spring.  They take a heavy toll of human happiness and wealth; and there is no object that more urgently calls for concerted human effort than that of mitigating them, and of alleviating the misery which they bring in their train.  Still better, of eradicating them if that is possible; but let none suppose that it can be lightly done.  Meanwhile, let us always remember that they form the atmosphere and medium in which the enduring tendencies of the business world must work themselves out.  It is often convenient to speak of “normal conditions” in this trade or that; but hardly ever can it be truly said of a particular moment that conditions are normal.  The normal is rather a mean level about which oscillations to and fro, round and about, are constantly taking place, but which itself is reached only by accident, if at all.  Whenever we say that some new factor should in the long run lower the price of this or that commodity or service, the picture which these words should convey to our mind is one of the price rising less on times of boom, and falling more in times of depression than is the case with other things.  And if ever our faith in some honored economic law is shaken by the apparent ease with which, perhaps, in times of active trade, sellers are able to advance their prices to whatever figure (so it almost seems) they choose to name, let us rally our sense of economic rhythm, and reserve our judgment until the trade cycle has run its course.

CHAPTER III

UTILITY AND THE MARGIN OF CONSUMPTION

Sec.1. The Forces behind Supply and Demand.  The laws enunciated in the preceding chapter constitute the framework and skeleton of all economic analysis; but they do not carry us very far.  It is only through the agency of these laws that any influence can affect the price of anything:  but what influences may so affect it is a question which we have still to consider.