The notion of half-century long swings in the growth of industrial capitalism was advanced by several economists, including Pareto, already before World War I, on the basis of empirical observations of long-term trends in the 19th-century statistics of prices, interest rates and trade. It was, however, a Dutch Marxist, Van Gelderen (1913) who was the first to attempt a systematic description and explanation of the phenomenon. He used the expressions ‘spring tide’ and ‘ebb-tide’ to describe the alternating periods of buoyant expansion and relative stagnation which he claimed to detect.

Nikolai Kondratiev, by whose name long cycles or swings in economic development are most widely known, was apparently unaware of Van Gelderen’s earlier work (in Dutch), when he published his own empirical and theoretical studies in the 1920s (Kondratiev 1925). Although he and Schumpeter (1939) used the expression ‘long cycles’, other authors have preferred the term ‘long waves’ (e.g. Mandel 1972) or ‘long swings’, but essentially they are all discussing the same phenomenon.

While he was Director of an Institute of Applied Economic Research in Moscow in the 1920s, Kondratiev sought to demonstrate the existence of long cycles from the 1770s onwards, on the basis of historical data for the leading industrial countries. At the time and ever since, this historical statistical evidence has been disputed, both by his more orthodox Marxist critics in the USSR and by economists outside (e.g. Weinstock 1964). Some of the main points at issue have been the statistical techniques (moving averages and trend analysis) and the limitations of the statistical data, particularly for the earlier periods when the only production series was for specific commodities. Time series for investment and employment were even more deficient. Of the original 25 time series which Kondratiev (1925) cited in support of his theory the majority covered two cycles and only three of them covered all three cycles.

The criticism of Kondratiev’s ideas and of other long wave theories has of course never been confined to the issue of the statistical evidence. Already in the 1920s Kondratiev’s Soviet critics pointed to the problem of exogenous ‘shocks’ to the world economy, such as wars, revolutions and gold discoveries and their effects on long-term fluctuations in prices and production. They also pointed to the variety of national circumstances in the duration and intensity of cyclical crises and booms and to the new features associated with each successive historical period. Finally, they disputed Kondratiev’s attempt to explain long waves in terms of the replacement cycle for very long-lived types of (mainly infra-structural) fixed investments.

It is highly unlikely that those who believe that long swings in economic life are a significant phenomenon, which merits some serious research and explanation, will ever satisfy their statistical critics, if only for the obvious reason that four cycles is still far too small a number on which to base any firm generalizations. Some historians associated with the journal Annales have claimed that the long swings go back to the Middle Ages. They base their claims largely on data relating to agricultural prices and among the possible explanations of long swings in the price of grain are theories of climatic fluctuations related to sun-spots (Braudel 1979).

The contemporary debate on long waves relates, however, almost entirely to the fluctuations in the development of industrialized economies over the last two centuries. Whilst the critics of Kondratiev believed that they had disposed of his theories and discredited his statistical techniques, it is hardly surprising that the deep depression of the 1930s and the depressed conditions of the 1980s both gave rise to renewed interest in long wave theories. Indeed the course of economic development in the 20th century appears to follow a long wave pattern much more consistently and obviously than that of the 19th century. If one of the tests of a theory is predictive power, then it must be said that Kondratiev’s analysis advanced in the 1920s gave a rather reliable forecast of the main trends in the world economy over the next sixty years.

However, most advocates of long wave theories deny deterministic explanations with fixed periodicity, maintaining only that the deeper structural crises, which have affected some, if not all, capitalist economies at intervals of approximately half a century, merit some special attention and explanation. They also point out that general equilibrium theory has not been particularly helpful in understanding the fluctuations in the long-term growth process of the world economy, or of national economies.

The growing interest in the problems of long-term fluctuations was not confined to economists of any particular ‘school’. Among those who have written books on the subject or contributed papers in the recent debate were both neoclassical (Glismann et al. 1980) and Marxist (Mandel 1980) economists, and some, such as Rostow (1978), who could be described as broadly Keynesian in their approach, or Dupriez (1947), who might be described as a monetary theorist. One striking feature of the international conferences on long waves (IIASA 1983 and 1985) was the evident revival of interest in the subject on the part of Russian and other East European economists and their renewed attempt to explain long waves in orthodox Marxist terms (Kuczynski 1985). Another group actively involved was the Systems Dynamics group at MIT led by Forrester (1981) who developed a long-term dynamic model of the US economy, which displays long wave characteristics based on alternating periods of over- or under-investment in the capital goods sector.

At the heart of the long wave debate in the 1980s has been the Schumpeterian interpretation of Kondratiev’s long cycles. Indeed many economists became aware of ‘Kondratiev cycles’ largely because of Schumpeter’s adoption of the idea and his attempt to provide an explanation in terms of successive waves of technical innovations or, as he described it, ‘creative gales of destruction’. Schumpeter suggested that each of the major upswings in the economy, which Kondratiev had detected, was based on a wave of new investment associated with the spread of one or several major new technologies, such as steam power and electric power. Schumpeter maintained that the growth process in capitalist societies was not simply accompanied by technical and organizational innovations, but was driven by such innovations. Since he believed that innovations were spread unevenly over time and across different sectors of the economy, it was consistent to regard them as the main source of disequilibrium in the system and as the source of a variety of cyclical fluctuations, including long cycles in the case of major new technologies.

The critics of a Schumpeterian explanation of long waves follow Kuznets (1940) in questioning whether any innovations could be so great in their impact on the economy as to cause major fluctuations in investment behaviour and the economy more generally. Among the most interesting and influential attempts to provide a plausible explanation of this relationship were those of Mensch (1975) and of Perez (1983, 1985).

Mensch suggested that radical innovations were bunched together during periods of deep depression, such as the 1830s, the 1880s and the 1930s. He explained this bunching in terms of the pressures on entrepreneurs to adopt novel solutions which they were unwilling to risk during boom periods when things were going well. Freeman et al. (1982) disputed the empirical evidence on the bunching of innovations as well as the theoretical explanation and suggested that the diffusion of clusters of interrelated innovations (‘new technological systems’) was more important in understanding cyclical fluctuations than the dates of discrete radical innovations.

Carlota Perez (1983, 1985) criticized Schumpeter for his failure to develop a satisfactory theory of deep depressions. She pointed out that although he offered a plausible explanation of investment booms in terms of the rapid diffusion of new technologies and the associated ‘band-wagon’ and ‘swarming behaviour’ of entrepreneurs, and could also explain recessions in terms of the ‘competing away’ of profit margins during diffusion and the limits to growth of any particular technology, he regarded the deeper depressions as ‘pathological’ and was unconvincing in his attempts to explain why newly emerging technologies should not take over the expansionary momentum. Kuznets (1940) had also spotted this weakness in Schumpeter’s theory of long cycles and asked ironically whether the heroic entrepreneurs got tired every 50 years.

Perez pointed out that in considering the introduction of revolutionary new technologies into the economic system, it is necessary to take into account the institutional and social framework as well as the economic sub-system more narrowly conceived. The really big changes in technology, such as the contemporary introduction of computerized information technology or the earlier introduction of energy-intensive mass and flow production systems, or of electric power, inevitably entail big changes in social institutions, as well as changes in company organization, patterns of investment and the skill profile of the work-force. But whereas technology changes very rapidly, there is considerable inertia in social institutions, as well as resistance from group interests associated with older technologies, sectors of the economy and occupations, who may feel their very existence is threatened by revolutionary changes in technology. Consequently for Perez depressions are the symptom of a structural mis-match between the potential of an emerging new paradigm in technology and a socio-institutional framework which is geared to an older (but now obsolescent) technological paradigm. Only when there have been far-reaching changes in social institutions and ways of organizing business can the full productivity potential of the new technology be realized. It follows from this mode of conceptualizing long swings in economic growth that the radical innovations which crystallize in a ‘new technology system’ or in a new ‘techno-economic paradigm’ have in many cases been introduced already before a period of depression (contrary to Mensch’s theory) but their widespread diffusion in many branches of the economy is hampered or prevented by the mismatch in social institutions, skills and capital stock (Freeman and Perez 1986).

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