Technological innovation and long waves

This chapter is about the existence of long cycles or long waves of economic growth. No one who has examined the dynamics of capitalist economies over long historical periods can doubt that they experience significant longterm variations in their aggregate performance. The question is whether these long-term variations are more than the outcome of a summation of random events and, further, whether they exhibit recurrent temporal regularities that are sufficiently well-behaved to call them “long waves.” In recent years there has been a strong resurgence of interest in such long-term movements, since their existence could provide a coherent explanation for the poor performance of capitalist economies over the past decade. This renewed interest also reflects a search for alternative ways of explaining the unbalanced nature of the growth processes of mature capitalist economies that go uncaptured by the Solow-Swan paradigm, in its concern with equilibrium dynamics and steady states of one, two, or multisector representations of the economy. The study of price and output swings of extended duration has a long tradition, having initially drawn the interest of both Marxist and non-Marxist writers around the turn of the century. Yet, it was the work of Kondratiev in 1925 which constituted the first systematic attempt to confirm such movements with data that included not only prices, interest rates, and wage series, but foreign trade, industrial production, and consumption for France, Britain, and (to a lesser extent) the United States. Kondratiev concluded that the data suggested the existence of long cycles with an average length of fifty years, and going back to the end of the eighteenth century.