Underconsumption and Overproduction Theories of the Business Cycle

There are many theories of the business cycle. Some are better than others but all of them are deficient in some way except Austrian business cycle theory (ABCT). None of the alternative theories provide, as does ABCT, a comprehensive and logically consistent explanation of the business cycle based on the facts of reality. Some correctly identify some aspects of the cycle and may offer valid explanations of some aspects of the cycle, but none of them fully explain the causes of the cycle or the monetary and real changes occurring in the economy as a result of the cycle. I address the main attempts to explain the cycle in this and the following two chapters. I show logically and factually why they do not provide a valid explanation of the cycle. Once this has been done, and if one reads volume one of this work on the business cycle, one will have a complete understanding of the cycle. One will know logically what causes the cycle, will see and understand the causal factors at work in the facts of history, and will understand where alternative theories go wrong.