MAIN IDEA:

The main idea of this brief, but important book is that the typical business cycles of 9-10 years do not cover the complete cyclical character of development and that there are much longer economic cycles – some 50 years long that represent powerful waves of increase or decrease in the levels of prosperity.

DETAILS:

1. Introduction

This introduction points to the role of long cycles discovered by Kondratieff’s work, which normally masked by regular 9 years cycles.

I-III. Method

This is just a statement that statistical methods used to analyze business cycles demonstrated required per capita analysis and taking into account that 9 years moving averages typically used smoothed secular trends.

VI. The Wholesale Price Level

This chapter represents analysis of French wholesale prices that demonstrates 3 long cycles: 1789 to 1814 (60 years), 1849 to 1896 (47 years) and one starting in 1896. Here is the graph:

Then author conducts similar analysis of cycles based on variety of statistical data:

V. The Rate of Interest

1. Other Series

This one is just reference to multitude of other series demonstrating the same trends.

1. Statistical Findings

Here are key findings of author’s statistical analysis:

(1) The movements of the series which we have examined running from the end of the eighteenth century to the present time show long cycles. Although the statistical-mathematical treatment of the series selected is rather complicated, the cycles discovered cannot be regarded as the accidental result of the methods employed.

(2) In those series, which do not exhibit any marked secular trend — e.g., prices — the long cycles appear as a wave-like movement about the average level. In the series, on the other hand, the movement of which shows such a trend, the cycles accelerate or retard the rate of growth.

(3) In the several series examined, the turning points of the long waves correspond more or less accurately.

(4) Although for the time being we consider it to be impossible to fix exactly upon the years that marked the turning points of the long cycles, and although the method according to which the statistical data have been analyzed permits an error of 5-7 years in the determination of the years of such turnings, the following limits of these cycles can nevertheless be presented as being those most probable:

(5) Naturally, the fact that the movement of the series examined runs in long cycles does not yet prove that such cycles also dominate the movement of all other series.

(6) The long waves that we have established above relative to the series most important in economic life are international; and the timing of these cycles corresponds fairly well for European capitalistic countries. On the basis of the data that we have adduced, we can venture the statement that the same timing holds also for the United States.

XI. Empirical Characteristics

Here are some conclusions:

XII. The Nature of Long Waves

Here author discusses the nature of long waves. He rejects the idea that these waves are caused by external events like wars, revolutions, and technological changes. Then author discusses in details why it is so for each of potential causes he reviews.

XIII. Conclusions

Author makes the following conclusion:

MY TAKE ON IT:

I believe that in other works beyond the scope of this book Kondratieff identified causes of long cycle with long term capital investment deterioration that lead to decrease in productivity of capital over time and consequent decrease in investment followed by decrease in consumption and depression. After long cycle hits bottom, the economy starts recovery with capital investment growth at the new and higher technological and infrastructural levels. I think it is only partially correct because levels of investment and overall economic development defined not by statistical numbers of economy performance, but by human actions, which depends less on economic statistics than on human psychological condition, moods, and believes. This links Kondratieff’s ideas of 60 years waves with idea of Saeculum cycles of societal development of approximately 80 years of psychological/political cycles when society goes through sequence: High – Awakening – Unraveling – Crisis. Historically Kondratieff’s third wave in which decline starts in 1914-20, somewhat coinciding with Unraveling-Crisis 40 years span ending in 1945. By this account we are now in 2020 approaching the end of Crisis period that sometime around 2025 would switch to High.  Here is graph of Kondratieff’s long waves from another source linking them to technological development: