The former is stimulated most during the cyclical upswing, and the latter is compelled most during the downswing. It is at least arguable that if economies moved in a straight line rather than a cyclical pattern, there might, in the long run, be less of both these benefits of the capitalist market system. However, whether that is so or not is academic, for the cycle is ineradicable.

Yet despite all this, the focus of economic debate in this country, and I suspect in most other developed countries, is almost exclusively on the short-term vagaries of the business cycle, about which policy-makers can in reality do very little, rather than on the conditions for improved performance over the longer term, about which, both nationally and internationally, much can be done.

There are, I suspect, three principal reasons for this extraordinarily perverse paradox. The first — and I list them in no particular order of importance — is the legacy of Keynesianism. Keynes himself, writing in the mid-1930s, was of course concerned less with the avoidance of cycles than with the avoidance of slumps, which he mistakenly believed to be almost the natural condition of free economies. Hence, for example, Keynes's statement in the General Theory that: 

"The right remedy for the trade cycle is not to be found in

abolishing booms and thus keeping us permanently in a 

semi-slump; but in abolishing slumps and thus keeping us 

permanently in a quasi-boom."

But it is not hard to see how, when Keynesianism came to be put into practice, in conditions far removed from those of slump and the 1930s, it readily degenerated into an obsession with the cycle as such, often with inflationary consequences — not least in the UK, where at one point during the late 1970s the annual rate of inflation reached 25 per cent. And even if we have, through bitter experience, succeeded in inoculating ourselves against the inflationary aspects of Keynesianism, the short-term preoccupation with the cycle is as great as it has ever been. 

The second reason for the paradox may be, as I have already discussed, the passionate desire of the economics profession to believe that everything that matters can be reduced to mathematical equations and numbers. Since this cannot be done with any remote degree of plausibility for the Nature and Causes of the Wealth of Nations, Adam Smith's subject matter must clearly be far less important than the dissection of the business cycle, which so readily lends itself to mathematical and numerical analysis.