Leakages into idle balances could, for practical purposes, be ignored. This did not mean economic instability was not possible. Marshall thought the main reason for fluctuations was the psychology of the business community. When business people were bullish the demand for loans increased. This may lead to investment in high risk under-takings, many of which may fail.
Pessimism replaces optimism.
The economy would adjust. No special action on the part of government was necessary. Government action could make things worse although the government could flatten out the fluctuations. He gave some role to government and foreshadowed the attacks launched by Keynes. Despite increases in population real wages had increased.