Kondratiev wave
From Wikipedia, the free encyclopedia
| Economic Waves series (see Business cycles) |
|
| Cycle/Wave Name | Years |
|---|---|
| Kitchin inventory | 3-5 |
| Juglar fixed investment | 7-11 |
| Kuznets | 15-25 |
| Bronson Asset Allocation | ~30 |
| Kondratiev wave | 45-60 |
In economics, Kondratiev waves - also called grand supercycles, surges, long waves, or K-waves - are regular S-shaped cycles in the modern (Capitalist) world economy. Fifty to sixty years in length, the cycles consist of alternating periods between high sectoral growth and periods of slower growth. This business cycle is more visible in international production data than in individual national economies and concerns output rather than prices. Some economists divide the Kondratiev wave into two 'seasons', namely, the Kondratiev Fall and the later part, the Kondratiev Winter. A bull market is associated with 'fall' and a bear market with 'winter'. More common today is the division into four periods with a turning point (collapse) between the first and second two.
The Russian economist Nikolai Kondratiev (1892-1938) was the first to bring these observations international attention in his book "The Major Economic Cycles" (1925) alongside other works written in the same decade. Two Dutchmen, J. van Gelderen (1891-1940) and Samuel de Wolff previously argued for the existence of 50- to 60-year cycles in 1913. However, only recently has the work of Wolff and Gelderen been translated from Dutch to reach a wider audience.
Early on four schools of thought emerged as to why capitalist economies have these long waves. These schools of thought revolved around innovations, capital investment, war and capitalist crisis. According to the innovation theory, these waves arise from the bunching of basic innovations that launch technological revolutions that in turn create leading industrial or commercial sectors. Kondratiev's ideas were taken up by Joseph Schumpeter in the 1930s. The theory hypothesized the existence of very long-run macroeconomic and price cycles, originally estimated to last 50-54 years.
Since the inception of the theories, various studies have expanded the range of possible cycles, finding longer or shorter cycles in the data. The Marxist scholar Ernest Mandel revived interest in long wave theory with his 1964 essay predicting the end of the long boom after five years and in his Alfred Marshall lectures in 1979. However, in Mandel's theory, there are no long "cycles", only distinct epochs of faster and slower growth spanning 20-25 years.
Long wave theory is not accepted by most academic economists, but it is one of the bases of innovation-based, development, and evolutionary economics, i.e. the main heterodox stream in economics. Among economists who accept it, there has been no universal agreement about the start and the end years of particular waves. This points to another criticism of the theory: that it amounts to seeing patterns in a mass of statistics that aren't really there. Moreover, there is a lack of agreement over the cause of this phenomenon.
Most cycle theorists agree, however, with the "Schumpeter-Freeman-Perez" paradigm of five waves so far since the industrial revolution, and the sixth one to come. These five cycles are
- The Industrial Revolution--1771
- The Age of Steam and Railways--1829
- The Age of Steel, Electricity and Heavy Engineering--1875
- The Age of Oil, the Automobile and Mass Production--1908
- The Age of Information and Telecommunications--1971
According to this theory, we are currently at the turning-point of the 5th Kondratiev. Some scholars, particularly Immanuel Wallerstein, argue that cycles of global war are tied to Capitalist Long Waves. Major, highly-destructive wars tend to begin just prior to an output upswing. Other theoriests such as Manuel Delanda maintain Kondratiev waves are examples of oscillatory social behavior; for example, with the emergence of abstract machines and artificial life.
[edit] References
Vincent Barnett, Kondratiev and the Dynamics of Economic Development. London: Macmillan, 1998.
Edward Cheung, Baby Boomers, Generation X and Social Cycles. Toronto: Longwave Press, 1994. [1]
Ernest Mandel, "The Economics of Neocapitalism", in The Socialist Register, 1964.
Ernest Mandel, Long waves of capitalist development: the Marxist interpretation (Alfred Marshall Lectures, 1979).
Chris Freeman and Fransisco Louca, As Time Goes By. From the Industrial Revolutions to the Information Revolution. Oxford: OUP, 2001.
Solomos Solomou, Phases of Economic Growth, 1850–1973: Kondratieff Waves and Kuznets Swings (1990).
Joshua Goldstein, Long Cycles: Prosperity and War in the Modern Age. New Haven, Yale University Press, 1988. [2]
Keith Harvey, Long cycles, long waves and expansionary phases (2005). [3]
Murray Rothbard, "The Kondratieff Cycle: Real or Fabricated?". Ludwig von Mises Institute, 1984.
Turchin, P., et al., eds. (2007). History & Mathematics: Historical Dynamics and Development of Complex Societies. Moscow: KomKniga. ISBN 5484010020
