4
A. Hansen ( 1938, 1941 ) starts from a contemplation of
the long secular growth process in the U.S. which reached
from the civil war to the great depression. There was,
he explains, extensive growth in the form of an increase
of population and an expansion of the economy into
undeveloped territory in the west of the U.S.: in addi tion
the capital-intensive infrastructure of the economy was
built up during this time ( transport, communications,power ).
All this involved high rates of investment with the
consequence that the economy was proceeding at full steam.
The extensive growth facilitated also intensive
growth by which he means growth of consumption per head
which involves innovation, new industries, growing productivity
and cheapening of consumption goods. The extensive growth
had also favored competition whereas for a stagnating
industry it is difficult to tolerate competition. The
consequence of the decline in competition was less
innovation and a price policy of corporations not
favorable to the expansion of the market.
The decisive reason why the economy had become"mature"
lay in the cessation of extensive growth and the
completion of the capital-intensive infrastructure. From
this and the difficulty of replacing extensive by intensive
growth followed the decline of investment opportunities.
The resulting gap in investment could only be filled,
according to Haasen, by public investment, the provision
of "utility creating assets."