Joseph Schumpeter's "long cycle" was named after Nikolai
Kondratieff, a prominent Russian economist and statistician of the 1920s who
had studied under M.I. Tugan-Baranovsky in
Kondratieff conducted what
may have been the first econometric study of long cycles in the world
economy, and then, in 1920, began a center for investigation of business
cycles, the Conjuncture Institute, which later became a part of
Kondratieff hypothesized the existence of regular and consistent "long waves" of economic activity, and he amassed statistical data covering several centuries to support his thesis. The chief characteristic of Kondratieff's long cycle is that periods of about 20-25 years of relatively high prices for food and raw materials give way, in the downswing, to approximately equal periods of relatively cheap food and basic materials.
A strong revival of interest in Kondratieff surged during the 1970s because it seemed that the world was entering the upswing of one of the "long waves"—that is, food and energy prices were climbing rapidly after several decades of relative decline. However, since roughly 1985, the worldwide trend in food and energy prices has been downward. This has not prevented numerous newsletters from touting Kondratieff’s name in predicting the “upcoming downturn,” especially a number of newsletters that are of questionable value, but which are aimed at those financial investors all too ready to believe that “the sky is falling.” It seems that a lot of people are always on the brink, and expect cataclysm to be upon us in short order.
The key lesson from history
about Kondratieff upswings is that maintaining an industrial society in the
face of relatively expensive basic products requires increasing investment in
ways that will expand the supplies of these basic products. A common response
in the past was to open up new supply areas: the American West,
Author: Ralph Byrns
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