CH. II

THE CONDITIONS OF EQUILIBRIUM

161

(neither of which is what the entrepreneurs themselveshave in mind); whilst, on the other hand, bothcourses are likely to aggravate their losses by reducingthe cost of investment. Nevertheless these courseswill in actual fact appeal to them, because, in so faras any class of entrepreneurs is able to adopt eitherof these courses in a degree greater than the average,they will be able to protect themselves. A discussionof the precise circumstances which determine thedegree in which a class of entrepreneurs or an in-dividual entrepreneur pursues the one course or theother over the short-period would, however, lead metoo far into the intricate theory of the economics ofthe short-period. It must be enough here to repeatthe indication already given on p. 125, that we donot require for the purposes of the present analysisto make any particular assumptions as to the timewhich has to elapse before losses (or profits), actualor anticipated, produce their full reaction on thebehaviour of entrepreneurs. It is sufficient that thegeneral tendency of a disequilibrium between savingand investment is in the sense described, and that,if the cause persists, the tendency must materialisesooner or later. Nor do any of the qualifications ofthis section affect in any way the rigour or the validityof our conclusions as to the quantitative effect ofdivergences between saving and investment on theprice-levels ruling in the market.

(vi.) The Condition op External Equilibrium

We have stated the argument so far as thoughwe were dealing with a Cbsed System, which was notsusceptible of buying and selling and of borrowing andlending relations with an outside world. But it istypical of the world of to-day that the country whosecurrency system we are considering should not onlybuy goods from and sell goods to, but should have

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