The Problem of Population 1 1

The area of land as well as the kinds of resources and the ease with which they are obtained, are unchanging. This means that they are used in an absolutely durative manner. Technic is stationary; the sano kinds of tools, processes, and methods pass from father to son. Abstinence is solely of the conservative kind. Under these conditions the "normal" equilibrium of prices of commodities, labor of all sorts, uses of goods, capitalization, and rate of interest would be un changing. Not that this equilibrium is maintained in a me chanical, automatic manner, in which men have no part. These levels of values and prices can be maintained only as a result of ceaseless choices, bids, and efforts on the part of all the members of the community. Men in a static society, each seeking to make advantageous choices, are just as much active factors in maintaining a level of prices as are men in a highly dynamic state. But given the static conditions of population, culture, resources, and technic, the subjective and objective conditions combine to give a static level of values.

Such a state of human society in this absolute degree never has been known, but it has been more or less approximated in many times and places. Examples are many primitive soci eties, such as the Esquimaux, native Australians, etc., con tinuing unchanged for many centuries; ancient Egypt and medieval Europe. Until the twentieth century China, indeed the Orient generally, has been synonymous with the unchange able in social and economic conditions. "Better fifty years of Europe than a cycle of Cathay." Many features of a static society are present everywhere much of the time. This conception is a type or norm by which we can study and judge the effect of each kind of forces separately, and not as they occur in haphazard combinations.

§ 3. Dynamics and the social point of view. Heretofore our study has been purposely confined as far as possible to the static aspects of the value and price problems. We were bent upon tracing the process by which individuals adjust their funds of wealth and labor to a general economic situation or level of valuation which they find and which they must accept as a fact given. We have recognized, however, that the indi vidual finds himself compelled, again and again, to adjust his choices to a somewhat altered general situation, or in turn, may, by his action (discovery, invention, enterprise) start new forces into motion which will eventually alter the situa tion further. In the foregoing discussion of value and price, this distinction between static and dynamic forces, problems, principles, and societies has been more than implied. We

have repeatedly referred to the more or less general changes as influencing the personal gains and losses of individuals, and even of whole classes of society. (See Chapter 27, section 13, note.) But in these references the purpose was still primarily to show the effects upon individual fortunes. We have now to take the larger view, and to consider these changes with reference to the effects upon the whole body of society.

Any state of economic forces may be studied in relation to value and price. If the situation were quite static, the price of every factor would be unchanging. A new cumula tive factor would carry the level up or down in the period of dynamic change. There it would remain until other forces again raised it or lowered it to a new level, permanent so far as that one force can determine it.

§ 4. Rhythmic change and cumulative change.

Into an economy that is characteristically static, disturbing influences are constantly entering. Some of these forces make a con siderable temporary change which, however, is but rhythmic, as it calls into operation counter-forces, bringing back the old level of equilibrium. Other forces are more lasting.

Dynamic problems in economics are not always easily dis tinguishable from static problems; but in most cases the dif ference is clear. Changes may range from very slight and temporary departures from a certain static equilibrium to In a completely static state the level of prices and incomes would continue unchanged throughout the successive periods of time, as repre sented by the line AAA which remains parallel with the base line. The dotted line B which oscillates above and below A represents the rhythmic change. Line C represents a transformational (truly dynamic) change through a period of time to a permanently higher static level of CC'; whereas D represents a transformational change and a lower static level DD'.

those that are relatively great and lasting. Accordingly, two types of dynamic change may be distinguished. One is the rhythmic change, the stato-dynamic change, where the move ment more or less regularly oscillates above or below a "nor mal equilibrium"; it is cyclical, in that the change runs a cycle above and below the normal and back to the starting point. This is dynamic in any brief period, but merely an unstable static when considered as a long-time average. An other type of dynamic change is cumulative, or transforma tional, or permanent, meaning that the forces at work are not such as will of themselves generate resistance (as does a swinging pendulum) sufficient to carry them back to the starting point.