ABSTRACT
It is easy to view the existence of excess capacity as an inevitable consequence of the fact that full capacity refers to some hypothetical ideal which one should expect to find in practice only in exceptional circumstances. Furthermore, the fluctuations in this measure are generally understood simply as manifestations of the business cycle, so that an increase in the amplitude of such variations merely represents a change of degree, and not one of kind. The same explanations and the same policy measures are therefore invoked in response, and the analytic importance of decreasing levels of capacity utilisation becomes relatively limited.
