The long waves in economic life.

Introduction

The idea that the dynamics of economic life in the capitalist social order is not of a simple and linear but rather of a complex and cyclical character is nowadays generally recognized. Since, however, has fallen far short of clarifying the nature and the types of these cyclical, wave-like movements.

When in economics we speak of cycles, we generally mean seven to eleven-year business cycles. Yet these seven to eleven-year movements are obviously not the only type of economic cycles. The dynamics of economic life is in reality more complicated. In addition to the above-mentioned cycles, which we shall agree to call 'intermediate', the existence of still shorter waves of about three and a half years' length has recently been shown to be probable.(2)

That is not all, however. There is, indeed, reason to assume the existence of long waves of an average length of about fifty years in the capitalist economy, a fact which still further complicates the problem of economic dynamics.

Method

[The second and third sections of Kondratieff's exposition may be summarized as follows: The succeeding study is to be confined solely to an inquiry into various problems connected with these long waves. Investigation here is made difficult by the fact that a very long period of observation is presupposed. We have, however, no data before the end of the eighteenth century and even the data that we do have are too scanty and not entirely reliable. Since the material relating to England and France is the most complete, it has formed the chief basis of this inquiry. The statistical methods used were simple when no secular trend was present in the series. If the series displayed a secular trend, as was the case among physical series, the first step was to divide the annual figures by the population, whenever this was logically possible, in order to allow for changes in territory. Then the secular trend was eliminated by the usual statistical methods applied to each series as a whole; and Kondratieff refers specifically to the methods presented by Dr Warren M. Persons in the Review of Economic Statistics in 1919 and 1920. The deviations from the secular trend were then smoothed by a nine-year moving average, in order to eliminate the seven to eleven-year business cycles, the short cycles, and random fluctuations possibly present.!

The wholesale price level