Strigl uses Erik Lindahl’s Studies in the Theory of Money and Capital to restate Wicksell’s cumulative process as a general theory of monetary disturbance. The process is not merely a doctrine of crises or of changes in the price level. It shows how a money rate of interest displaced from the equilibrium rate enters the formation of relative prices, capital values, and the time structure of production.
Die These lautet, daß ein Zinsfuß, der von der bestimmten Gleichgewichtsbedingungen entsprechenden Höhe abweicht, zu einem fortschreitenden Prozeß von Veränderungen in der Wirtschaft führen muß.
English translation: The thesis is that an interest rate which deviates from the level corresponding to definite equilibrium conditions must lead to a progressive process of changes in the economy.
Against monetary theories that treat money as a neutral overlay on an independently determined real economy, Strigl stresses that credit conditions alter the allocation of resources. A bank rate set too low raises the capitalized value of future returns, makes longer production plans appear profitable, and shifts demand toward producers’ goods. The Wicksellian process therefore consists not simply in “inflation,” but in a real reorientation of production under misleading monetary signals.
The capital-theoretic core is the role of interest in selecting among possible methods of production. Interest is not only a distributive share or a payment for loans; it is the calculation device that limits how long and roundabout production may become. When the rate is artificially reduced, methods formerly excluded by cost calculation enter the field of profitable investment.
Eine spezifische Selektionsfunktion des Kapitalzinses besteht nun in der Begrenzung der Produktionsumwege.
English translation: A specific selective function of interest on capital consists in limiting the roundaboutness of production.
Strigl’s strictest model assumes full employment, no new saving, no capital consumption, and flexible prices. In such an economy, cheaper bank credit cannot conjure the subsistence fund needed to sustain a longer production period. Resources are pulled into earlier stages, while the supply of consumption goods falls. The boom thus contains an intertemporal contradiction: labor and goods are immobilized in unfinished processes, but consumers have not restricted demand enough to make those processes completable without strain.
Die Formel von dem „zeitraubenden Produktionsumweg“ muß wörtlich genommen werden.
English translation: The formula of the "time-consuming roundabout of production" must be taken literally.
This is also why Strigl treats forced saving cautiously. The process may redistribute income toward groups that save more, or temporarily reduce real consumption through wage lags and price changes, but such effects are contingent. They cannot be assumed to provide exactly the capital required by the new investment structure. If genuine saving accompanies the expansion, the disturbance may be softened or neutralized; if not, the cheap-credit expansion merely begins projects whose real prerequisites are absent.
His later variations qualify but do not overturn this result. Non-competing factor groups, idle workers, or unused plant can ease adjustment only under restrictive conditions. The important exception is not idle capacity in isolation, but unused capacity spread through the production structure, including intermediate goods already near completion. Only then can the economy bridge the interval created by longer investment without an immediate shortage of consumption goods.
In discussing Myrdal, Strigl reformulates the point through capital values: a low money rate raises capitalization above investment costs and so stimulates investment. This confirms the Wicksellian mechanism while preserving Strigl’s central objection to any view that treats the needed saving as automatically generated by the process. His criticism of Lindahl turns on the same issue. Dynamic expectations matter, but even without expectations of continuing inflation, the real gap remains if saving has not supplied the means of support.
Auch wenn das weitere Steigen der Preise nicht erwartet wird, muß der Konsumgüterausfall eintreten, soweit nicht vorher ein Sparen die neuen Investitionen „alimentiert“.
English translation: Even if no further rise in prices is expected, the shortfall in consumer goods must occur, insofar as saving has not previously "provisioned" the new investments.
The essay’s conclusion is austere: monetary policy can change capital valuations and redirect production, but it cannot create capital merely by lowering interest. Sustainable capital formation requires a restriction of consumption, whether prior, simultaneous, or embodied in already available intermediate capacities. Strigl’s Wicksellian process is therefore a theory of intertemporal discoordination: cheap money can start longer production, but only saving can carry it through.
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