The Long Waves in Economic Life Author(s): N. D. Kondratieff and W. F.

Stolper Reviewed work(s): Source: The Review of Economics and Statistics, Vol. 17, No. 6 (Nov., 1935), pp. 105-115 Published by: The MIT Press Stable URL: http://www.jstor.org/stable/1928486 . Accessed: 25/02/2013 11:44
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The Review ofEconomic Statistics

VOLUME XV

NOVEMBER,

1935

NUMBER

THE LONG WAVES IN ECONOMIC LIFE

N. D. KONDRATIEFF

FOREWORD
are happy to be able to presentin translationthe The editors of the REviEw OF ECONO1aCSTATISTICS under the title"Die langenWellender Konjunktur," peculiarly importantarticle by Professor Kondratieff, which, und Sozialpolitik in I926 (vol. 56, no. 3, pp. 573-609). The combining appeared in the Archiv fiurSozialwissenschaft circumstances of an increasing interestin "long waves" and the difficulty of securingaccess to the originalarticle would alone justifytranslation and publicationof Kondratieff's contribution to the theoryof the trade cycle. In addition,the editorswould take this means of indicatingtheirintention fromtime to timeof rendering available to the English-using articlesin foreign worldoutstanding periodicals. This translationof ProfessorKondratieff's article was made by Mr. W. F. Stolperof Harvard University. of space, the editorshave taken the liberty to summarize Due to the limitations certainsections of this translation. With the exception of a ten-pageappendix of tabular material,however,all tables and charts have been included.

connected into variousproblems to an inquiry I. INTRODUCTION here is Investigation with long waves. these life ofeconomic THE idea thatthedynamics period a very long fact that by the made difficult social orderis not of a in the capitalistic howWe have, is presupposed. of observation and of a complex simpleand linearbut rather of the eighteenth the end data before ever, no recoggenerally is nowadays cyclicalcharacter and eventhedata thatwe do have are of century has fallenfarshort however, nized. Science, reliable. Since the and not entirely too scanty the nature and the types of these clarifying and Franceis the England relating to material movements. wave-like cyclical, it has the chief basis of formed most complete, wegenineconomics wespeakofcycles, When were methods used statistical The this inquiry. cycles. yearbusiness meansevento eleven erally in the was present trend when no secular simple are movements But thesesevento elevenyear a as trend, series secular displayed series. If the cycles. economic of type not only the obviously first step the series, the physical was case among more is in reality life of economic The dynamics by thepopulatotheabove-mentionedwas to dividetheannualfigures In addition complicated. this was possible,in logically tion, whenever to "intermedicall which shall we agree cycles, Thenthe in territory. changes to allowfor ofstillshorter wavesofabout order ate," theexistence by the usual stabeen seculartrendwas eliminated hasrecently length andone-half years' three as a whole; methods appliedtoeachseries tistical shownto be probable.' refers tothemethods specifically But thatis not all. Thereis, indeed,reason andKondratieff by Dr. WarrenM. Personsin this of long waves of an presented to assume the existence from in I9I9 and I920. The deviations ofabout 50 yearsin thecapital- REVIEW averagelength werethensmoothed by a ninetrend compli- thesecular a factwhich stillfurther isticeconomy, in orderto eliminate the average, yearmoving of economic dynamics. catestheproblem sevento elevenyear businesscycles,the short fluctuations possibly andrandom cycles, present.] 11-III. METHOD II and III ofKondratieff's exposition IV. THE WHOLESALE PRICE LEVEL [Sections as follows: maybe s'ummarized While the indexof Frenchpricesgoes back solely studyis to be confined The succeeding and
to as referred REVIEW OF ECONOlnC STATISTICS [hereafter "this REvIEw"', v (I923), PP. Io-i6.
1 Cf. J. Kitchin,"Cycles and Trendsin EconomicFactors,"

indicesdate back to the close of the American not to overburden In order century. eighteenth
[ I051

only to the end of the i850's, the English

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io6

THE REVIEW
CHART I. -INDEX

OF ECONOMIC

STATISTICS

NUMBERS OF COMMODITY PRICES* (1901-10 =ioo)

NO~~~~

--

60

_ _____ ___

__ _-_ -

_ A- -

Ebo~

zU~~~~~~~~~~~~~~~ [[El~~~~~~~~~~~~~~~~D

1-I

NO

-?he

dt

a--lp

HO

a t bai -hog us-f--la-racexhng ats as ee realclatd niI gol numer

For England, thereis for 1782-1865 the index of Jevons;for I779-I850, a new indexnumber,computedby Silberling

at present is carried index, which after 1846, we have Sauerbeck's and published in thisREVIEW, V (1923); fortheperiod than commodities data of the pricesof individual is baseduponmore complete SinceSilberling's index on by theStatist. indexnumber. Both From 846 on we use Sauerbeck's A78.-846. fortheperiod used theformer we have thatofJevons,

on the basis of their relationduringI846-50, forwhichperiodtheyare both available; after indiceshave been tied together we have shiftedthe seriesto a new base, 1961-10. For the period I80I-20 and since 1914, in which periods this procedure, England was on a paper standard,the index numbershave been recalculatedon a gold basis. forI 791-1801, H. V. Roelse (Quarterly series,whichhave been tied together: For the UnitedStates,we use the following 1915); I825-39, (ibid., December, 1917); I80I-25, A.H. Hansen Association, December, of the American Statistical Publications StatesSenateon on Finance oftheUnited from theCommittee (ibid., June,n91); I84t90, Falkner(Report C. H. Juergens s2d Congress,2d session,Report No. 1394, Part I [Washington:Government WholesalePrices, Wages, and Transportation, are on thebase I922-10. For theGreenPrinting OFice,March3, I893]); sinceI890, theB. L. S. indes. All indesnumbers AnnuaireStatistique,9i22 [whichutilizesthe sourcesabove cited].

(h862-78), backperiod

are taken fromthe Silberling's index] on a goldbasis. All data [except they havebeenrecalculated

data are the statistical this studywithfigures, of charts.' in theform exclusively presented on Charti ofprices plotted numbers Theindex in any nortreated smoothed have been neither a mereglanceat the otherway. Nevertheless, chart shows that the price level, despite all a succesexhibits and irregularities, deviations sionoflongwaves. longwave embraces of the first The upswing I789 to I8I4, i.e., 25 years; its theperiodfrom in I8I4 and endsin I84Q, a period begins decline

in 6o years.2

completed of 35 years. The cycleis, therefore,

1 [Ten pages of tabularmaterialweregiven by Kondratieff at the end of his article. The chartspresentedin this transof those in the original lation are not merelyreproductions 2 In the upswing, the English index exhibitsseveral peaks, articlebut have been drawnanew fromthe data givenin his fallin theyearsI799, i8o5, i8io, and I8I4; butsince tabular appendix. A few slight discrepanciesbetween the which downwardtendencycan be but in afterthe year I8I4 a distinctly were discovered, new chartsand those of Kondratieff point. we regardthisyear as the turning observed, significant.-Editors.] no case werethe discrepancies

in I849 and wavebegins The riseofthesecond ends in I873, lasting 24 years. The turning is not the same in the United point,however, Statesas in Englandand France;in theUnited in theyeari866,butthis Statesthepeak occurs by theCivilWar and castsno is to be explained doubt on the unityof the picturewhich the inthetwocontinents. ofthewaveexhibits course The declineof the secondwave beginsin I873 and ends in I896, a periodof 23 years. The ofthesecondwaveis 47 years. length

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THE LONG WAVES IN ECONOMIC LIFE

I07

of the thirdwave of interest-bearing securities The upwardmovement The quotations opposite beginsin I896 and ends in I920, its duration manifest, as is wellknown, a movement ofthewave,accord- to that of generalbusinessactivity and of the being24 years. The decline iflongwavesare operain I920. rate.Therefore, interest ingto all data, begins rate,the of the interest It is easilyseen that the Frenchpricesafter tivein the fluctuations parallelto movement thecloseofthei850's movegenerally of bond quotationsmust run in a prices. to that of commodity counter andAmerican prices.It is,therefore,direction theEnglish whichexhibits existedin Justthisis shownin our chart, veryprobablethat this parallelism of the clearlythe longwaves in the movement periodas well. the preceding rate. oftheinterest and consequently thatthree We conclude, greatcycles quotations therefore, of the pricelevel The chart startsonly afterthe Napoleonic are present in the movement longwave thatthefirst theperiod sincetheendoftheI 78o's,the Wars, during i.e.,aboutthetime priceshad reachedits peak; it is onlyhalfcompleted. The waves of commodity last ofwhich ofthe their duration does not covertheperiodof theupswing thesamelength, arenotofexactly wave latter. Considering the data at hand,however, between 47 and 6o years. The first varying is thelongest. we may supposethat the quotationsof state also. bondstookpartin thismovement V. THE RATE OF INTEREST a decidedly actuallymanifest Englishconsols betweenI792 and I8I3. oftheinterest tendency The course ratecanbe seenmost downward ofthediscount Theirquotation from themovement conveniently in I792 iS 90.04; in I8I3, on the dropmost they secu- other rateand thequotations ofinterest-bearing hand,it is 58.8I. Although lesson random rapidly depend in theyearsI797 and I798, yetthissteep rities.Becausethelatter theinflu- decline more accurately andreflect downfluctuations and thegeneral is onlyan episode, ence of long-run factors, we use hereonly the ward tendency fromI792 to I8I3 stands out ofstatebonds. quotations quiteclearly.3 of thebeginning theperiodfrom Accordingly, perfectly agrees rates.Thisperiod rising interest prices. waveofcommodity with thatoftherising rises afterI8I34 The waveofbondquotations _ Rentz- _ F_encfl rate declines -or the wave of the interest w __ tlE _ _ -_ -40 even till the middleof the forties. (See the data, conto theunsmoothed chart.) According sols reachedtheirpeak in I844; the Rente,in great cycle in the I845. With this, the first rateis completed. movement oftheinterest ofbondquotations movement The downward thesecond during rate) interest the rise of the (or of the French Chart 2 showsthe quotations Fromthis I870-74.5 to lasts from I844-45 cycle Rentel and of Englishconsols.2Both have a price of market the I897, until onward time the periodof observation. seculartrendduring conseand again, rises securities interest-bearing thesecular from The chartshowsthedeviations down. With this, rate the interest goes quently moving bymeansofa nine-year smoothed trend is completed. cycle the second great average. ofthequotations (risein the The newdecline 1
_-

CHART2 QUOTATIONSOF INTEREST-BEARINGSECURITIES

the I790's up to I8I3 appears to be the phase of

to I90I-IO, series combined

Rente,after Until I825 the quotationsof the five-per-cent Rente. In order to this the quotations of the three-per-cent computedrelativeswiththe connectboth series,we have first the base of the base I825-30 forboth series. Then we shifted

3 Cf. N. J. Silberling, "British Financial Experience,I790i830," thisRxVIEW, I (I9I9), p. 289.

4 The

with the price curve. The originaldata are taken fromthe AnnuaireStatistique [StatistiqueGeneralede la France], I922. 2 According and to the data in WilliamPage, ed., Commerce Vol. 2 (London, I9I9), statisticaltables,pp. 224-25. Industry, withthe base Relativeshave been calculated fromthe figures,
I9OI-IO.

movingaverage. comparable the use of the nine-year them tomake inorder

our chartbecause of yearshave disappearedfrom first

data, consolsactuallyreach their to the original 5 According lowest point in I866, but the general tendencycontinuesto be one of declineuntil I874. The slumpof quotationsin I866 rate just precedis connectedwiththe increasein the interest crisisof thatyear,and withthe Austroing the money-market PrussianWar.

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Io8

THE REVIEW OF ECONOMIC STATISTICS seriespresented in SecFor his foreign-trade takes the sum of French tionVII, Kondratieff corwerefirst and imports.The figures exports the for changes, and thereafter rected population seculartrend(in the formof a second-degree deviaThe resulting parabola) was eliminated. moving tions,smoothed by use of a nine-year in Chart 4. Afteran average,are presented
CEA-RT4._!n +4 40
-ED

rateof interest) lasts from I897 to I92I. Thus theexistence in themovement of ofgreatcycles the interest rate appears very clearly.' The ofthesecyclesagreerather periods closely with the corresponding of periodsin the movement wholesale commodity prices. VI-VII. WAGES AND FOREIGN TRADE [In Section VI, Kondratieff examinesthe course ofweekly wagesofworkers in theEnglish cotton-textile industry sincei8o6 and ofEnglish
agriculturallaborers since 1789.2 The original

FRENCH FOREIGN TRADE

__

wage data are reduced to a gold basis and then expressed in the formof index numbers with I892 as the base year. Chart3 presents these
CHART 3.WAGES IN ENGLAND

__
-

----

."---NI .1 ___f__X__
I_1

_N

__

--

i4

Eo

-40 -10

I -

I -19 I

- -0o 00

the authorconcludes of the chart, examination trade also show the on foreign data that the M~~I-I11 LI -1E0-K--I-I-I- existenceof two great cycles,the periodsof -}-+:in theother withthoseobserved coincide which _ laborer- i e -Africu1tural data.] t______+ ww f-_+ _-A--tiIT
ca1e Cnl +forI[ Scale
-

workenr I-IColltn-textil
tn 179n )5 inm 15tn 10,t#nsg1 auwn slu

n 15n

Rr 7 ncs tA Imn 15 tnilm 1Rn51650 loo

1 trn tsv300n

smoothed trend, from as dev'iations wagefigures movingaverage. Konby use of a nine-year to of thissection devotestheremainder dratieff in Chart3, presented of theseries a description that,despite whichanalysishe concludes from oftheavailabledata, "longwaves thescantiness of presentin the movement are undoubtedly fairly wages,the periodsof whichcorrespond pricesand the well with those in commodity rate." interest
1 The existenceof these cyclesis also confirmed by several des Zinsotherstudies: P. Wallich, "Beitrage zur Geschichte far NationalJahrbiucker fussesvon I8oo bis zur Gegenwart," okonomieund Statistik, iII. Folge, Vol. 42, pp. 289-3I2; J. Lescure, "Hausses et Baisses Generales des Prix," Revue R: A. Macdonald, "The d'EconomiePolitique,Nr. 4 (I912); Rate of InterestSince I844," Journalof theRoyal Statistical T. T. Williams,"The Rate LXXV (1912), pp. 36I-79; Society, of Discount and the Price of Consols," ibid., pp. 380-400. the discussionof the last-mentioned Also ibid., pp. 40I-II, studies,especiallythe speech of E. L. Hartley,pp. 404-o6. 2 [Earnings forI806-I906 are taken workers ofcotton-textile fromG. H. Wood, The Historyof Wages in theCottonTrade

VIII. THE PRODUCTION AND CONSUMPTION OF COAL AND PIG IRON, AND THE PRODUCTION OF LEAD only themovements So farwe haveexamined in busito changes sensitive ofsuchmagnitudes, value a purely as possesseither nessconditions, rates, interest prices, character, e.g.,commodity or at leasta mixedcharacter suchas and wages, however, trade. Our study, thedata on foreign if we did not also wouldlose muchof its force ofpurely series. physical analyzethebehavior we chooseEnglishcoal proFor thispurpose of coal,4as and Frenchconsumption duction,3 ofpigironand of production wellas theEhglish by the lead.5 We dividedthe originalfigures and eliminated fromthe resulting population, from seriesthe seculartrends.The deviations after by use beingsmoothed thelinesof trend, average, werethenanaof a nine-year moving in Chart5. are shown lyzed. The results Continuous data are available,unfortunately, after the i830's, in parteven theperiod onlyfor
only after the i850's.

ofLabourStatistics. the Abstract in both clarity but theseappear with striking For agricultural laborers, wage data forI 789-I896 are from charts. A. L. Bowley, "The Statisticsof Wages in the United King3 According to the data of W. Page, op. cit. dom During the Last Hundred Years: Part IV, Agricultural 4 AnnuaireStatistique, I908 and 1922. LXII (i899), Wages," Journalof theRoyal StatisticalSociety, and 6 According to Britishand ForeignTrade and Industry, are from Page, op. cit. The the figures pp. 555 Sf. Thereafter, Abstract [fortheUnitedKingdom]. the Statistical to England and Wales.] data refer

(London, I9Io),

p. I27;

withI906, theyare from beginning

and one-half to two greatcyclescan be shown,

Consequently,only one

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THE LONG WAVES IN ECONOMIC LIFE of coal in theincrease Thereis a retardation [in France]until the end of the consumption i840's, then the advance becomesmore rapid to the and reachesits peak in I865, according curve (on the chart), and in I873, smoothed curve.In thelatter totheunsmoothed according a maxalsoreaches coalproduction year, English curve. Then to theunsmoothed according imum,
CHART 5.- CONSUMPTIONOF COAL IN FRANCE AND PRODUCTIONOF COAL, PIG IRON, AND LEiADIN ENGLAND

IO9

Coalproduction andcualconmumption forFrance 5cale _ _ Scaie for England

T7F1~~~~v~
-4Di

Scal-u
-

o5uotion Coald giFrancJ

4 b5 5

;
-

in
-' - <

- CDD

+40 +5ii

t0B:20'5D008

8Q9

10

51Sn

-4L
0

?oaprouir
--5v

it '35 1040 ' 65 i>b0'5 1070 '4 5100 'f9 1910 '70t10' 109 '95 1' N 0 1900 Tcl ig iron and.loadl prodtuction in England tln~~~~~~E 1a d; -1 _ _ 5cl apgiron _cale1oc'laadt

above, althoughseveral other series did not show the cycleswiththe same clarity.Value serieswhichshowlong waves are the deposits of the Bank of France,and and the portfolio depositsat the Frenchsavingsbanks; seriesof are French x price)character a mixed(quantity and totalEnglish imports, and English imports of trade. As regardsthe movement foreign of the existence character, of a physical indices proin the coal longwaveshas beenestablished and of the UnitedStates,of Germany, duction of production in thepig-iron world; ofthewhole the of and the UnitedStates and of Germany of wholeworld;in thelead and coal production of spindles of number the in the UnitedStates; the in States; United the in industry thecotton acreagein theUnitedStatesand theoat cotton acreagein France,etc. on the other It was absolutelyimpossible, longwaves in Frenchcotton hand,to establish in thewool and sugarproduction consumption; of of the UnitedStates; and in the movement severalotherseries. X. STATISTICAL FINDINGS thusfarperwe have presented The evidence mitssomeconclusions. of the serieswhichwe The movements (i) fromthe end of the have examinedrunning show long time to thepresent century eighteenth cycles. Althoughthe statistical-mathematical is rather compliselected oftheseries treatment cannotbe regarded cated,thecyclesdiscovered employed. ofthemethods result as theaccidental is to be set the Againstsuch an interpretation fact that these waves have been shownwith important in all themore aboutthesametiming examined. oftheseries any In thoseserieswhichdo not exhibit (2)

?lironJ~2

100 '0 1011' 107 '9'11 '49v

90 191111'001910'10 l90J

whichcomesto an end in the decline, follows

I890-94, givingway to a new long upswing. So

in to therapidity in thedata relative we observe concoal and increase of coal production the nearlythe wholeof two largecycles, sumption closelyto the marked secular trend- e.g., prices- the long the periodsof whichcorrespond aboutthe movement appearas a wave-like found whenconsidering cycles we have already periods on the other hand, In the series, averagelevel. otherseries. the a such shows trend, which of of pig ironand themovement Englishproduction Similarly, of rate growth. the or retard accelerate of cycles theexistence lead indicates clearly sufficiently theturning examined, series (3) In theseveral one and one-half largecycles. or less more ofthelongwavescorrespond points Table I, by clearly is shown This accurately. IX. OTHER SERIES of the investigation results the combines which herethe we breakoff For thesake ofbrevity, above but also analysisof the long waves in the not onlyof the data considered systematic other series.' of several behaviorof individualseries. We have also examinedotherdata, some of whichlikewise 1 Table i enumerates the maximaand minimaaccordingto showedthe same periodsas those mentioned the originaldata. The problemof the most accurate method

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IIO

THE

REVIEW

OF ECONOMIC
TABLE Firstcycle I

STATISTICS

Secondcycle of Beglinning rise

____ ______ _

Thirdcycle Begin ningof rise

__ _____ ____

and series Country

of Beginning rise

of Beginning decline
______ _____

___ _____ ___

of Beginning decline

Probable of beg~inning
ecline

France i. Prices..... . 2. Interest rate. . .. oftheBankofFrance 3. Portfolio

...
....

....
.... .... .

.... I8I6*
I8I0*

.
I844

i873
I872

I896
I894 I902

I920
I92I I914

at thesavings banks . 4. Deposits ofcoalminers........ 5. Wages 6. Imports. 7. Exports ........................... trade ..... 8. Totalforeign ........... .................. 9. Coalconsumption I0. Oat acreage .......................

.... ....

i85I I844

I873

... I789
I790

....

....

I848 i848 I848 i849 I850* I849 I844

I844

i849

I874 I874 I872

I872

I892

i88o

I873 I875 I873 I874

I875

I895 I896 I894 I896 I896 I892 I896 I897 I894 I893 I89I I892
I889 I890

I914 I9I4 I914 I9I4

I9I5
I920

England i. Prices.
2.

laborers 3. Wages of agricultural .1..... workers .......... 4. Wages of textile trade .. ..... 5. Foreign 6. Coalproduction..... 7. Pigiron production. ..... 8. Lead production..... United States i. Prices. 2. Pigiron production..... . .

Interest rate..

I8I4

i8i6

I92I

.
.... ....

I790

....

I8I2-I7

i8io* i8io* .... ....

....

i850t i842$ i850* ....

I874 I873 I873 i87I? i870 i866

I914 I914

I914 I9I4

I790

acreage. 4. Cotton
Germany

3. Coalproduction.

... ....
....

I8I4

....
....

....

I849

. .... ....

I875-8o
I893 I874-81 i873

I896 I900

I920

I896 i892-95 I895 i894

I896

I920 I9I8 19I5 19I5 I914

I94

.... Coal production..

....
....
....

Wholeworld2 i. Pigironproduction....... 2. Coal production..... 1Reversed cycles.

....

i872
I873

* Approximate dates. in theyearI835. falls minimum t Another minima liein theyearsI837 and I855. $ Other falls in theyeari88i. maximum ? Another Another falls in theyearI883. maximum ? Another falls in theyearI882. maximum

2 The datawhich changes. refer to thewhole world havenotbeencorrected forpopulation

It is easyto see from thistablethatthere is a veryclose correspondence in the timing of the of the seriesin the individual wave movements countries, inspiteofthedifficulties present inthe treatment of thesedata. Deviationsfrom the
for the determination of the maxima and minima would deserve a special analysis; at presentwe leave this question open. We believe only that the indicated turning points are the mostprobableones.

generalrule that prevailsin the sequence of the cyclesare veryrare. It seemsto us that is moreremarkthe absenceofsuch exceptions able thanwouldbe their presence. forthe timebeingwe consider (4) Although it to be impossible to fixexactly upontheyears that marked the turning points of the long cycles,and although the methodaccording to whichthe statistical data have been analyzed

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THE LONG WAVES IN ECONOMIC LIFE

III

inthedetermination (i) The longwavesbelong to thesame really of5-7years an error permits limits complex theintermein which process thefollowing dynamic ofsuchturnings, oftheyears as diatecycles be presented their with economy ofthecapitalistic of thesecyclescan nevertheless run and depression phasesof upswing principal beingthosemostprobable: cycles,howtheircourse. These intermediate theendofthe from lasted i. Therise theveryexiststampfrom a certain secure ever, oftheI790's or beginnmng |780's ence of the long waves. Our investigation until I8Io-I7. wave long First that duringthe rise of the long i8I0-I7 demonstrates lastedfrom 2. The decline 1 until are morenumerous, waves,yearsof prosperity I844-5I. during predominate yearsofdepression from I844-5I until whereas I. Theriselasted the downswing.' I870-75. S I870-75 lastedfrom 2. The decline of the long waves, Duringthe recession (2) S until I890-96. proan especially suffers rule, as a agriculture, what was This depression. long and I890-96 until nounced from lasted i. Therise happenedafterthe NapoleonicWars; it hapwave 1I9I4-20. long Third

{
2.

theWorldWar.2 yearsafter ofthelongwaves,an During therecession (3) discoveries ofimportant largenumber especially of production in the technique and inventions however, are made,which, and communication are usuallyappliedon a largescale onlyat the ofthenextlongupswing. beginning gold ofa longupswing, beginning At the (4) has also extended out,ourinvestigation pointed world the and a rule, as increases production to seriesin whichno suchwaves wereevident. by the enlarged goods]is generally On the other hand, it is by no means essential market[for colonial of especially and of new assimilation that the long waves embraceall series. (6) The long waves that we have established countries. the periodof the riseof the (5) It is during above relative to the series most importantin tension ofhigh theperiod during i.e., waves, long economic life are international;and the timing as a that, forces, of economic expansion in the wellforEurofairly corresponds of thesecycles and wars and extensive themostdisastrous On the basis of the rule, countries. pean capitalistic occur. the revolutions data thatwe have adduced,we can venture to that we attribute to is be emphasized It statement that the same timingholds also for charan relationships empirical the United States. The dynamicsin the develop- theserecurring that we do not by any means and only, acter the ment of capitalism,however,and especially of the the explanation contain in the lattercountry hold that they of the fluctuations timing waves. long may have peculiarities.
(5) Naturally,the fact that the movementof the series examined runs in long cycles does not yet prove that such cycles also dominatethe movementof all other series. A later examination withthis point especially in mind will have to be made to show which ones of these share the describedwave-likemovement. As alreatdy

inthe pened again fromthe beginningof the i870's begins probably Thedecline years I9I4-20. in the onward;and the same can be observed

XII. THE NATURE OF LONG WAVES of thattheexistence to maintain Is it possible of the in the capitalist dynamics cycles long themovement characterizing series ofstatistical on thebasisofthepreceding is proved point economy economy.Fromanother of the capitalist data whichwe were relevant The statements? to the materialrelating of view,the historical about cover years.Thisperiod I40 to quote able of economicand social life as a development one-half and Although two only. cycles comprises of long waves. the hypothesis whole confirms to is the data sufficient embraced by the period herean analcan norshallundertake We neither I Staatswisder several (Handworterbuch "Krisen," Cf. A. Spiethoff, ysis of this material. Nevertheless, 4th edition). at senschaften, whichwe have arrived generalpropositions 2 Cf. Ernle, English Farming Past and Present (London, of long and theexistence importance concerning and G. F. Warrenand F. A. Pearson, The Agricultural 1922), (NewYork,1924). Situation wavesmaybe presented.
XI. EMPIRICAL CHARACTERISTICS We wereled to these conclusionsby the study

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II2

THE REVIEW OF ECONOMIC STATISTICS

oflongwaves, rulesforthe movement of long waves. These oftheexistence thequestion decide the helpus nowto evaluatecorrectly it is not enoughto enableus to assertbeyond regularities waves. mentioned. those just objections doubt the cyclicalcharacterof in technique have without doubta i. Changes we believethatthe availabledata Nevertheless to very ofcapitalistic character on thecourse influence thiscyclical potent to declare are sufficient But nobodyhas provedthemto development. be veryprobable. origin. and external notonlyby the have an accidental We are led to thisconclusion but also of production preof the factualmaterial, consideration Changesin the technique scientific-technical oflong sume (i) that the relevant to theassumption becausetheobjections have beenmade,and and inventions discoveries wavesare veryweak. cyclical possibleto use them. It has beenobjectedthatlongwaveslack the (2) thatit is economnically to denythecrewhichbusinesscyclesdisplay. But It wouldbe an obviousmistake regularity discoveries in scientific-technical "regularity"as ative element this is wrong. If one defines then long and inventions.But froman objectiveviewin regulartime-intervals, repetition would occur if one as muchas the point,a still greater error wavespossessthischaracteristic in social believed ofthose periodicity ones. A strict and intensity thatthedirection intermediate accidoes not existat all discoveries were entirely phenomena and inventions and economic thatsuchdirecmore probable -neither in the long nor in the intermediatedental;it is much at tionandintensity ofthenecessities area function waves. The lengthof the latterfluctuates of development least between 7 and iI years,i.e., 57 per cent. ofreallifeand of thepreceding between science ofthelongcycles fluctuates and technique.1 The length in themselves, inventions 48 and 6o years, Scientific-technical i.e., 25 percentonly. to be thesimilarity however, to bringabout a real is understood are insufficient If regularity Theycan ofdifferentchange of thefluctuations ofproduction. in thetechnique and simultaneity in remain conditions so longas economic ineffective to the same degree series,thenit is present areabsent. Thisis application to their waves. favorable thelongas in theintermediate to consist shown ofthescientific-technical is understood by theexample regularity If, finally, and eighteenth waves are an inventions of the seventeenth in the factthat the intermediate thenthelongwaves centuries wereused on a largescale only which phenomenon, international either. during at the close of inthisrespect the industrial revolution from thelatter do notdiffer in the theeighteenth thenthe If thisbe true, is nolessregularity century. there Consequently, are of a that changesin technique ones,and assumption longwaves thanin the intermediate from and do notin factspring character if we want to designate the latteras cyclical, random to economic loses much of its weight. necessities notto deny we arebound thischaracterization of that the development We have seen before theformer. that technique ofthelong critics] out [byother is partoftherhythm It has beenpointed itself from the interme- waves. the longwaves -as distinct the also influence the causes within 2. Wars and revolutions diate ones whichcome from - are conditioned verystrongly. development by casual, courseof economic system capitalistic do not comeout of a and events,such But warsand revolutions extra-economic circumstances in technique, (2) warsand revolu- clearsky,and theyare not causedby arbitrary as (I) changes They originate personalities. into acts of individual ofnewcountries tions,(3) theassimilation circumstances. in gold fromreal, especially economic, theworld and (4) fluctuations economy, thatwarsandrevolutions acting The assumDtion production. areimportant. But they, 1 One of the best and most compellingargumentsfor the Theseconsiderations liesin thefact assumptionthat scientific too,arenotvalid. Theirweakness and technicalinventionsand disandtake coveries are not made accidentallybut are intimatelyconthecausalconnections thatthey reverse nectedwiththeneedsofpracticallifeis givenby thenumerous to be thecause,or see an acci- cases theconsequence and discoveriesare made in whichthe same inventions dentwherewe have reallyto deal witha law at thesame timeat different independently places and entirely para- ofone another. Cf. thelonglistofsuchcases in W. F. Ogburn, the events. In the preceding governing Change (NewYork,I924), p. 90. Cf.alsoDannemann, thoughbriefly, Social graphs,we have deliberately, und in ihrem in ihrerEntwickelung Die Naturwissenschaften the establishment of someempirical Zusammenhange considered I1923). (Leipzig,

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THE LONG WAVES IN ECONOMIC LIFE the outsidecause long waves evokesthe from follow each as to whytheythemselves question and solely duringthe other with regularity is oflongwaves. Muchmoreprobable upswing in theaccelthatwarsoriginate theassumption erationof the pace and the increasedtension economic life,in the heightened of economic and that for markets and rawmaterials, struggle thepreshappenmosteasilyunder socialshocks forces. sureofneweconomic can also be therefore, Wars and revolutions, intotherhythm ofthelongwavesand do fitted these movefrom which notprove tobe theforces but ratherto be one of their mentsoriginate, they But once theyhave occurred, symptoms. a potent on thepace influence exercise naturally ofeconomic dynamics. and direction

II3

to a rise in pricesand to a quickening in the tempoofeconomic life. But thisdoesnotmean that the changesin gold production are of a casual,outsidecharacter and thatthe wavesin prices andin economic lifearelikewise causedby chance. We consider thistobe notonlyunproved butpositively wrong.This contention originates from thebelief, first, thatthediscovery of gold and theperfection ofthetechnique mines ofgold production are accidentaland, secondly, that everydiscovery ofnewgoldminesand of technicalinventions in thesphere ofgoldproduction aboutan increase in thelatter.However brings greatmaybe thecreative element in thesetechnical inventions and the significance of chance in thesediscoveries, yet theyare not entirely - and this accidental.Stilllessaccidental is the - are the fluctuations in gold proof new countries main point 3. As regardsthe opening-up it seemsto be quite obvious ductionitself. These fluctuations economy, are by no fortheworld a function an outsidefactor meanssimply oftheactivity ofinventhatthiscannotbe considered oflong torsand of the discoveries of new gold mines. explain theorigin which willsatisfactorily for On thecontrary, theintensity ofinventors' waves. The UnitedStateshave beenknown and activity and theapplication oftechnia relatively verylongtime;forsomereasonor explorers' in the world calimprovement othertheybeginto be entangled inthesphere ofgoldproduction, on a majorscale onlyfrom themiddle as well as the resulting increaseof the latter, economy theArgen- dependupon other,moregeneralcauses. The Likewise, ofthenineteenth century. of gold production upon technical tine and Canada, Australiaand New Zealand, dependence of newgoldminesis and discoveries theendofthenine- inventions werediscovered longbefore and derived. teenth century,although they begin to be onlysecondary embodigoldisa generally recognized to a significant Although in theworldeconomy entwined is generally ofvalueand,therefore, desired, extentonly with the comingof the i890's. It is ment And like everycomin thecapitalistic it is only a commodity. clearhistorically that, perfectly it has a costof production. But if this new regionsare opened for modity economicsystem, - even in newly commerce duringthose periodsin which the be true,thengold production - can increase significantly for newmarkets and new discoveredmines ofold countries desire i.e., if the becomesmoreurgent onlyif it becomesmore profitable, sourcesof raw materials ofthevalue ofthegolditself to its cost It is equallyapparent thatthe relation thantheretofore. theprices oftheworld are of production (and thisis ultimately ofthisexpansion limits economy morefavorable. becomes determined by the degreeof this urgency.If of othercommodities) is unfavorable, of new countries If thisrelation evengold mines thisbe true,thenthe opening of whichis by no means yet exof a long wave. the richness does not provokethe upswing on a new upswingmakes the hausted maybe shutdown;ifit is favorable, On the contrary, mines will and even ofnewcountries, the otherhand, newmarkets, relatively poor exploitation of rawmaterials and pos- be exploited. newsources necessary of the value of gold to Whenis the relation the pace of capitalsible,inthatit accelerates for most favorable that of othercommodities isticeconomic development. know that the We commodity whether gold production? There remains the question 4. leveltoward theendof lowest reachtheir discovery of new gold mines,the increasein gold prices and a consequentincreasein thegold a longwave. This meansthatat thistimegold production, and goldprofactor has its highest purchasing power, as a casual,outside stock can be regarded This can be ductionbecomesmost favorable. thelongwaves. causing in Table 2. ingoldproduction leadsultimately illustrated by thefigures Anincrease

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II4

THE REVIEW OF ECONOMIC STATISTICS of the value of gold the timewhenthe relation thantheremore unfavorable to itscostbecomes in improvements tofore, the need fortechnical ofnewmines and forthediscovery goldmining and thusstimmoreurgent necessarily becomes in thisfield.Thereis, ofcourse, ulatesresearch though necessity, untilthis urgent a time-lag, success. In leads to positive alreadyrecognized, and technical golddiscoveries reality, therefore, will reach their in gold mining improvements passed when thelongwavehasalready peakonly ofthedownin themiddle itspeak,i.e.,perhaps thissupposiswing.The availablefactsconfirm
tion.' In the period afterthe i870's, the following gold discoverieswere made: i88i in Alaska, I884 in the Transvaal, I887 in West Australia, I890 in Colorado, I894 in Mexico, I896 In the

these as can be seen from Gold production, as we approach profitable more becomes figures, a lowpointin thepriceleveland a highpointin powerofgold (I895 and thefolthepurchasing years). lowing
TABLE 2. SELECTED STATISTICS oF GOLD MINING IN THE TRANSVAAL, I890oI9I3* Cost ofproduction

Year I890 ........

Profit

Per ton of gold ore 42 Sh.

..... . i895 .. i899 ........

I903 . .

33 sh. 5 d.
28Ssh. 24 sh.

2 d.

I9I3 ........

906 ........

od. 9 d. 22 Sh. 2 d. I7 sh. II d.

2 d. 7 Sh. ii sh. ii d. 3d. I4sh. I4 Sh. II d. ii sh. 6 d. 9 sh. Io d.

in the fieldof goldKlondike. The inventions themost importechnique, and especially mining forthe tantones of thisperiod(the inventions of ore), were also made duringthe to treatment that the stimulus It is clear,furthermore, is well known. i88o's, as becomes necessarily increased gold production and technical improvements, Gold discoveries a longwave declines.We, the further stronger gold proif naturally influence occur, will they that gold can suppose theoretically therefore, effect that the can have the They duction. mostmarkincrease mustin general production place somewhat in takes gold production increase and vice edlywhenthewave fallsmostsharply, of the earlier thanat the end ofthe downswing versa. can assist the expansion also wave. They long is not as the connection however, In reality, once that limitis reached. simpleas this but becomesmorecomplicated, of gold production, in reality.Espehappens what This is precisely of the changes mainly just becauseof theeffect a persistent, the in the i870's, after decline cially and thedisofgoldproduction in thetechnique in goldproslender, increase admittedly though coveryof new mines. It seemsto us, indeed, ;2 whereas, in the I883 duction about year begins in technique and new that even improvements of discoveries influences of disturbing the spite law obeythesamefundamental golddiscoveries reallybeginsonly the upswing withmoreor less and inventions, itself, as doesgoldproduction has its purchasing greatest after reached gold in thetechin timing.Improvements regularity is due not increased production and the power; of and the discovery nique of gold production fields but in a gold newly discovered only to the new gold minesactuallydo bringabout a lowThis is old ones. also to the degree of gold; they considerable eringin the cost of production in Table 3. illustrated the figures by ofthesecoststo thevalue therelation influence of theextent goldpro- 1 Berridge, ofgold,and consequently loc. cit.,p. i8i. 2 Cf. Statistical at States,I922, pp. 708-og. Abstract oftheUnited duction.But thenit is obviousthatexactly
* Cf. W. A. Berridge, "The World'sGold Supply,"this
II (I920), p. I84. REVIEW, TABLE

3. -

GOLD PRODUCTION,

I 890-I 900

ounces) (Unit: thousand

total World I890. I895 .9,6I5 I900. 5,749 I4,838 Transvaal 440
2,01I7

UnitedStates I,589
2,255

Australia I,588 2,356 4,46I

Russia I,I35 I,388

I1,072

Canada 65 IOI
I,029

Mexico 737
290 4II

India 9
230 4I2

3,638
I82

3,437

Source: Berridge,loc. cit., p.

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THE LONG WAVES IN ECONOMIC LIFE but this development development, obviously proceedsnot only through intermediate waves ofecobutalso through longones. The problem nomicdevelopment in totocannotbe discussed here. In asserting the existence of longwaves and in denying thattheyariseoutofrandom causes, we are also of the opinionthat the longwaves arise out of causes whichare inherent in the essenceof the capitalistic economy.This natXIII. CONCLUSIONS urallyleads to the question as to the natureof Theobjections to theregular character thesecauses. We arefully cyclical awareofthedifficulty of the longwaves, therefore, seem to us to be and great importance ofthisquestion; butin the unconvincing. preceding sketch we had no intention of laying In viewof thiscircumstance and considering thefoundations for an appropriate oflong theory also the positivereasonsdevelopedabove, we waves.' think that,on thebasis oftheavailable data,the 'I arrived at the hypothesisconcerningthe existenceof existence oflongwaves is very long waves in the years 19I9-2I. Withoutgoinginto a special ofcyclical character analysis, I formulated my general thesis for the firsttime probable. thereafter in my study,The WorldEconomyand Ecoshortly At the same time, we believeourselves justi- nomicFluctuations in theWar and Post-WarPeriod (Mirovoje fied in saying thatthelongwaves,ifexistent at chozjajstvo i jego konjunktury vo vremjai posle vojny[Moscow, all, are a very important and essentialfactor 1922]). During the winter and spring of 1925, I wrote a studyon "Long Waves in EconomicLife" ("Bol'schiie in economic a factor development, theeffects of special cyklykonjunktury"),whichwas publishedin the volume of which can be found in all theprincipal fields of the Institutefor Business Cycle Research, Problemsof EconomicFluctuations (Voprosy konjunktury, Vol. I). Only at the socialand economic life. of I926 did I become acquainted withS. de Wolff's Evengranting oflongwaves, theexistence one beginning article"Prosperitatsund Depressionsperioden," Der lebendige is, of course, not justified in believing thateco- Marxismus,Festgabezum 70. Geburtstage vonKarl Kautsky. in manypointsreachesthe same resultas I do. The nomic dynamicsconsistsonly in fluctuationsDe Wolff works of J. van Gelderns,which de Wolffcites and which arounda certain level. The courseof economic have evidentlybeen publishedonly in Dutch, are unknown activityrepresents beyonddoubt a processof to me. Fromtheforegoing onemayconclude, it seems to us, that gold production, even thoughits increasecan be a condition foran advance in commodity pricesand for a generalupswing in economic is yet subordinate to the activity, ofthelongwavesand consequently rhythm cannot be regarded as a causal and random factor that bringsabout these movements fromthe outside.

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