Kondratiev Wave

k-wave

Kondratiev waves (also called supercycles, great surges, or long waves) are described as sinusoidal-like cycles in the modern capitalist world economy. Averaging fifty and ranging from approximately forty to sixty years in length, the cycles consist of alternating periods between high sectoral growth and periods of relatively slow growth. Unlike the short-term business cycle, the long wave of this theory is not accepted by current mainstream economics.

Russian economist Nikolai Kondratiev (1892 – 1938) was the first to bring these observations to international attention in his book ‘The Major Economic Cycles’ (1925). Kondratiev was a Russian economist, but his economic conclusions were disliked by the Soviet leadership and upon their release he was quickly dismissed from his post as director of the Institute for the Study of Business Activity in the Soviet Union in 1928. His conclusions were seen as a criticism of Joseph Stalin’s intentions for the Soviet economy. As a result he was sentenced to the Soviet Gulag and later received the death penalty in 1938.

Later, in ‘Business Cycles’ (1939), Joseph Schumpeter suggested naming the cycles ‘Kondratieff waves,’ in honor of the economist who first noticed them. In the 1950s, French economist François Simiand proposed naming the ascendant period of the cycle ‘Phase A’ and the downward period ‘Phase B.’ Some market commentators divide the Kondratiev wave into four ‘seasons’, namely, the Kondratiev Spring (improvement or plateau) and Summer (acceleration or prosperity) of the ascendant period and the Kondratiev Fall (recession or plateau) and Winter (acceleration or depression) of the downward period. Russian economic historian, Andrey Korotayev claims to have detected K-waves in the world GDP, showing Kuznets (business cycles) of 17 years, and three Kuznets cycles per Kondratiev.

A Kuznets curve is the graphical representation of American economist, Simon Kuznets’s hypothesis that economic inequality increases over time while a country is developing, and then after a certain average income is attained, inequality begins to decrease. Kondratiev identified three phases in the cycle: expansion, stagnation, recession. More common today is the division into four periods with a turning point (collapse) between the first and second phases. Long wave theory is not accepted by most academic economists, and among economists who accept it, there has been no universal agreement about the start and the end years of particular waves. This points to another criticism of the theory: that it amounts to seeing patterns in a mass of statistics that aren’t really there.

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