ABSTRACT
In the last chapter we considered the conditions in which a many-product economy with man-made instruments of production might be in equilibrium in a stationary state. We must now turn to the basically different and, alas, much more difficult problems connected with the notion of equilibrium in a many-product economy with man-made investments of production, which is growing through time. For it is our intention in this volume as far as possible to analyse the movement through time of an economy which, while it is growing, nevertheless remains in equilibrium. Equilibrium movement through time essentially means that the citizens who take decisions about economic matters on any one day should not later, when they look back, regret what they have decided. In our perfectly competitive economy, in so far as the productive decisions of the entrepreneurs are concerned, this will certainly be true if (i) they know at 8 a.m. on any day what the technical possibilities of production are during that day and (ii) they have correctly foreseen the selling prices at which they can sell their output at 8 a.m. on the next day. In Part 1 of this volume we avoided this difficulty by assuming that there was only one product and that its money price was successfully stabilized by monetary action. Entrepreneurs had no difficulty in forecasting the future course of prices.
