The Size of the Economy and Its Relation to Stability and Steady Progress: I

Abstract

A casual glance at National Income data for various national economies seems to provide all the evidence we need for an answer — though it is, perhaps, an unexpected one — to the question: ‘How is a nation’s stability related to its size?’ Comparing the record for the period beginning in the 1920s and ending in 1952 (with the war years and those immediately following omitted) for the United Kingdom, Germany, France, Sweden, and the United States, we find a reasonably clear-cut relationship: the greatest instability was found in the largest economies; and vice versa. The United States, by any standard the largest of all, showed itself to be the most unstable, with its instability symptomized by the Great Depression which was deepest in that country; Sweden, the smallest of the five, displayed remarkable stability, with a depression decline of only 9 per cent, or less than a third of that experienced by the United States. The United Kingdom, which also suffered a comparatively small decline in income, seemed to be only a little less stable than Sweden, while Germany and France showed less instability than the United States but much more than Sweden and the United Kingdom.