AN ESSAY IN DYNAMIC THEORY rate above the actual rate. This state of affairs sets up a de pressing influence which will drag the actual rate progressively farther below the warranted rate. In this as in other cases the movement of a dynamic determinant has an opposite effect on the warranted path of growth to that which it has on its actual path How different from the order of events in static theory I The reader may have some difficulty in the expression"stimu- lus to expansion. What is the significance of this, in view of the fact that some growth is assumed as a basic condition? It must be remembered that the value of G depends on aggregates o and ay. These are sums of numerous quantities for which individuals are responsible. It must be supposed that at all times some individuals are jogging on at a steady level, others are risking an increase of orders or output, others are willy-nilly curtailing G is the resultant of their separate enterprises. Some are in any event likely to be disappointed. If G is equal to Go, it is to be supposed that the general level of enterprise undertaken in period 0, including in gum a certain increase over that in the preceding period, is found to be satisfactory. Those running short of stock balance those with surpluses. This justifies further action on similar lines, though the individuals increasing orders for stock in trade or planning new equipment in period 1 be identical in person with those doing so in period 0. If an ex pansive force is in operation, more individuals, or individuals having greater weight, will be induced by their trading position to venture increases than did so in the preceding period. Con- versely if a depressing force is in operation The dynamic theory so far stated may be summed up in two propositions. (i)A unique warranted line of growth is determined jointly by the propensity to save and the quantity of capital required by technological and other considerations per unit increment of total output. Only if producers keep to this line will they find that on balance their production in each period has been neither excessive nor deficient. (ii)On either sic line is a"field"in which centrifugal forces operate, the magnitude of which varies directly as the distance of any point in it from the warranted line. Departure from the warranted line sets up inducement to depart farther from it. The moving equilibrium of advance is thus a highly unstable one The essential point here may be fur to the expressions over-production and under-production.The intinction between particular over-production and general over- roduction is well known. In the event of particular over