The next problem concerned Hayek’s analysis of forced savings. Recall that in the Austrian theory of the cycle the lengthening of the structure of production, begun under a regime of forced savings, never gets completed. It is always the case that rising consumer prices signal firms that their earlier decision to employ more roundabout methods was in error. Firms abandon their incomplete capital projects and thereby precipitate the crisis. But isn’t it possible that the transition to more capital-intensive production methods could be completed in time? Might not the consumer goods produced by using more roundabout methods come onto line just as consumer demand begins to rise? In short, why must the traverse to a new structure of production always be interrupted before completion?
Hayek admitted in his reply that “it is upon the truth of this point that my theory stands or falls.” And, sadly for Hayek, his insistence that the traverse could never be completed strikes many current commentators as being the chief deficiency of his theory of the cycle. The general consensus is that, while the scenario painted by Hayek is a possible one, he neither demonstrated its necessity nor gave adequate attention to the lags implicit in the process of adjustment that he portrayed. Hayek’s theory fits some, but not all, trade cycles: It is not, as Hayek purported it to be, a general theory of the cycle.
—Bruce Caldwell, ed., editor’s introduction to The Collected Works of F. A. Hayek, vol. 9, Contra Keynes and Cambridge: Essays, Correspondence, by F. A. Hayek (Indianapolis: Liberty Fund, 1995), 38-39.