1st Edition

The Long Wave in Economic Life

By J.J. Van Duijn Copyright 1983
    256 Pages
    by Routledge

    256 Pages
    by Routledge

    Of all fluctuations in economic activity, the long wave or Kondratieff cycle is easily the most puzzling and least understood one. Does it really exist, and if so, is it only a cycle in prices or a cycle in economic activity at large? What causes it, and has it been confined to Europe or does it affect the world economy as a whole?

    These questions, which seemed of little relevance in the prosperous years of the postwar growth era, have gained new importance since 1973. With the downturn of the long wave, interest in it has enjoyed a revival, as it did in the 1930s. A great number of publications on the long wave have appeared since 1973, many of which have added to our insight of what causes the recurrent alternations of growth acceleration and retardation. This book is the first in the English language in which all important long wave theories, old as well as recent, are brought together. It focuses on the long wave as an international phenomenon, affecting all industrialised countries. It contains new theory as well as empirical evidence and in the final section suggests a number of policy recommendations to generate innovation.

    This book offers an interpretation of long-term economic development different from those commonly found in the literature. It will be of interest to students and scholars of the economics of growth and change, as well as to economic historians and policy-makers. This book was first published in 1983.

    Preface ix

    PART I.{emsp}CYCLES AND TRENDS

    I. Cyclical Fluctuations 3

    Four Cycles 3

    The Inventory Cycle 8

    The Fixed Investment Cycle 11

    The Kuznets Cycle 15

    The Kondratieff Cycle 18

    II. Growth as an S-Shaped Phenomenon 20

    Representations of Growth 20

    Growth as an S-Shaped Curve 21

    Industry Growth Patterns 26

    Asymptotic Growth Curves 32

    Appendix A: Measuring the Rate of Economic Growth 37

    Appendix B: Estimating the Parameters of Asymptotic Growth Curves 42

    III. Secular Trends 45

    Rostow’s Stages of Economic Growth 45

    Economic Growth in the Very Long Run 54

    PART II.{emsp}LONG WAVE THEORIES

    IV. The Discovery of the Long Wave 59

    First Sketches of a Long Wave 59

    Two Dutchmen 61

    Kondratieff 63

    A Brief Survey of Pre-war Literature 68

    Appendix C: Kondratieff’s Writings 71

    V. The Kondratieff as a Price Cycle 73

    Fluctuations in Prices 73

    Rostow’s Model of the Kondratieff Cycle 83

    VI. Innovation Theories 93

    Innovation 93

    Schumpter’s Theory of Economic Development 97

    Mensch’s Theory 10

    VII. Fluctuations in Infrastructural Investment 112

    Infrastructural Investment as a Cause of Long Waves 112

    A Simple Long Wave Model 125

    VIII. Innovation, Innovation Life Cycles, and Infrastructural Investment 129

    PART III.{emsp}EMPIRICAL EVIDENCE

    IX. Long Waves in Production 147

    Fluctuations in Industrial Production 147

    Fluctuations in Capital Formation 158

    A Long Wave Chronology 162

    Appendix D: Testing the Long wave Hypothesis after Trend Elimination with a Log-Linear Trend 165

    Appendix E: Testing the Long Wave Hypothesis by Means of Spectral Analysis 169

    X. Fluctuations in Innovations 173

    A Survey of Basic Innovations 173

    Fluctuations in Innovations Over Time 180

    Innovations by Sector 185

    PART IV.{emsp}THE FOURTH KONDRATIEFF DOWNSWING

    XI. The Stagnation of the 1970s 195

    What Caused the 1973-Downturn? 195

    The Current Depression and the Previous One 203

    The Slow Response of Some Economic Agents to Stagnation 205

    Appendix F: The Current and the Previous Depression: A Comparison of the United States and the United Kingdom 209

    XII. Economic Policy During a Depression 211

    What Will Happen During a Depression Phase 211

    The Extra Complication: Rigidity 214

    The Need to Offer a ‘New Deal’ 218

    Bibliography 227

    Index 235

    Biography

    J.J. Van Duijn