CH. 20 PURE THEORY OF THE CREDIT CYCLE 313

case the increment of wealth would accrue more to thenew entrepreneurs entering into production and less tothose with goods already in process when the increasedproduction begins—with the result that this alterna-tive cannot occur in competitive conditions.

(2) The same result could also have been broughtabout without any transference of wealth from con-sumers to entrepreneurs if the factors of productionwould accept a proportion of their money-wages in adeferred form, only to be exchanged for available out-put as and when new saving is available from othersources. For example, if the wage-interval is equalto the production-interval so that r = 1, or if the carry-forward is increased at every wage-interval by theappropriate amount, or if savings are sufficientlyincreased in some other way, there will be no rise inthe price-level.

(3) The pre-cycle bank depositors will, if they sittight throughout the credit cycle, suffer neither gainnor loss ; their bank-deposits are worth the sameamount at the end as at the beginning. The incre-ment in working capital, most of which on the assump-tions so far made belongs to the entrepreneurs, hasaccrued entirely at the expense of current incomes,which have diminished in purchasing power, and notat all at the expense of depositors.

(4) Whilst it is the producers who have to accepta smaller real income per unit of productive effort inthe interests of raising the fund of working capital so asto enable the whole population to be fully employed,almost the whole of the resulting increment of wealthaccrues, as a pure windfall, to the entrepreneurs.

If, however, we were to suppose that the Societyunder observation is a completely socialised State inwhich the State fixes wages, determines the volumeof saving and is the sole entrepreneur, then no questionof inequity would arise as a concomitant of the processof increasing the fund of working capital. For in such