History of concept[edit]

The Soviet economist Nikolai Kondratiev (also written Kondratieff) was the first to bring these
observations to international attention in his book The Major Economic Cycles (1925) alongside
other works written in the same decade.[3][4] In 1939, Joseph Schumpeter suggested naming the
cycles "Kondratieff waves" in his honor.
Two Dutch economists, Jacob van Gelderen and Samuel de Wolff, had previously argued for the
existence of 50- to 60-year cycles in 1913.
Since the inception of the theory, various studies have expanded the range of possible cycles,
finding longer or shorter cycles in the data. The Marxist scholar Ernest Mandel revived interest in
long-wave theory with his 1964 essay predicting the end of the long boom after five years and in
his Alfred Marshall lectures in 1979. However, in Mandel's theory, there are no long "cycles", only
distinct epochs of faster and slower growth spanning 2025 years. [citation needed]
The historian Eric Hobsbawm wrote of the theory: "That good predictions have proved possible
on the basis of Kondratiev Long Wavesthis is not very common in economicshas convinced
many historians and even some economists that there is something in them, even if we don't
know what." [5]

Characteristics of the cycle[edit]

Kondratiev identified three phases in the cycle: expansion, stagnation, and recession. More
common today is the division into four periods with a turning point (collapse) between the first and
second phases. Writing in the 1920s, Kondratiev proposed to apply the theory to the 19th
century:

17901849 with a turning point in 1815.

18501896 with a turning point in 1873.

Kondratiev supposed that, in 1896, a new cycle had started.

The long cycle supposedly affects all sectors of an economy. Kondratiev focused
on prices and interest rates, seeing the ascendant phase as characterized by an increase in
prices and low interest rates, while the other phase consists of a decrease in prices and high
interest rates. Subsequent analysis concentrated on output.

Explanations of the cycle[edit]

Technological innovation theory[edit]
According to the innovation theory, these waves arise from the bunching of basic innovations that
launch technological revolutions that in turn create leading industrial or commercial sectors.
Kondratiev's ideas were taken up by Joseph Schumpeter in the 1930s. The theory hypothesized

the existence of very long-run macroeconomic and price cycles, originally estimated to last 5054
years.
In recent decades there has been considerable progress in historical economics and the history
of technology, and numerous investigations of the relationship between technological innovation
and economic cycles. Some of the works involving long cycle research and technology include
Mensch (1979), Tylecote (1991), The International Institute for Applied Systems Analysis (IIASA)
(Marchetti, Ayres), Freeman and Lou (2001), Andrey Korotayev[6] and Carlota Perez.
Perez (2002) places the phases on a logistic or S curve, with the following labels: the beginning
of a technological era as irruption, the ascent as frenzy, the rapid build out as synergy and the
completion as maturity.[7]

Demographic theory[edit]
Because people have fairly typical spending patterns through their life cycle, such as spending on
schooling, marriage, first car purchase, first home purchase, upgrade home purchase, maximum
earnings period, maximum retirement savings and retirement, demographic anomalies such as
baby booms and busts exert a rather predictable influence on the economy over a long time
period. Harry Dent has written extensively on demographics and economic cycles. Tylecote
(1991) devoted a chapter to demographics and the long cycle.[8]

Land speculation[edit]
Main article: Georgism
Georgists, such as Mason Gaffney, Fred Foldvary, and Fred Harrison argue that land speculation
is the driving force behind the boom and bust cycle. Land is a finite resource which is necessary
for all production, and they claim that because exclusive usage rights are traded around, this
creates speculative bubbles, which can be exacerbated by overzealous borrowing and lending.
As early as 1997, a number of Georgists predicted that the next crash would come in 2008. [9][10]

Debt deflation[edit]
Main article: Debt deflation
Debt deflation is a theory of economic cycles, which holds that recessions and depressions are
due to the overall level of debt shrinking (deflating): the credit cycle is the cause of the economic
cycle.
The theory was developed by Irving Fisher following the Wall Street Crash of 1929 and the
ensuing Great Depression. Debt deflation was largely ignored in favor of the ideas of John
Maynard Keynes in Keynesian economics, but has enjoyed a resurgence of interest since the
1980s, both in mainstream economics and in the heterodox school of Post-Keynesian economics,
and has subsequently been developed by such Post-Keynesian economists as Hyman
Minsky[11] and Steve Keen.[12]

Modern modifications of Kondratiev theory[edit]

There are several modern timing versions of the cycle although most are based on either of two
causes: one on technology and the other on the credit cycle.
Additionally, there are several versions of the technological cycles, and they are best interpreted
using diffusion curves of leading industries. For example, railways only started in the 1830s, with
steady growth for the next 45 years. It was after Bessemer steel was introduced that railroads
had their highest growth rates; however, this period is usually labeled the "age of steel".
Measured by value added, the leading industry in the U.S. from 1880 to 1920 was machinery,
followed by iron and steel.[13]
The technological cycles can be labeled as follows:

The Industrial Revolution1771

The Age of Steam and Railways1829

The Age of Steel and Heavy Engineering1875

The Age of Oil, Electricity, the Automobile and Mass Production1908

The Age of Information and Telecommunications1971

Any influence of technology during the cycle that began in the Industrial Revolution pertains
mainly to England. The U.S. was a commodity producer and was more influenced by agricultural
commodity prices. There was a commodity price cycle based on increasing consumption causing
tight supplies and rising prices. That allowed new land to the west to be purchased and after four
or five years to be cleared and be in production, driving down prices and causing a depression,
as in 1819 and 1839.[14] By the 1850s the U. S. was becoming industrialized. [15]

Other researchers[edit]
Several papers on the relationship between technology and the economy were written by
researchers at theInternational Institute for Applied Systems Analysis (IIASA). A concise version
of Kondratiev cycles can be found in the work of Robert Ayres (1989) in which he gives a
historical overview of the relationships of the most significant technologies. [16] Cesare Marchetti
published on Kondretiev waves and on the diffusion of innovations.[17][18] Arnulf Grblers book
(1990) gives a detailed account of the diffusion of infrastructures including canals, railroads,
highways and airlines, with findings that the principal infrastructures have midpoints spaced in
time corresponding to 55 year K wavelengths, with railroads and highways taking almost a
century to complete. Grbler devotes a chapter to the long economic wave.

[19]

Korotayev et al. recently employed spectral analysis and claimed that it confirmed the presence
of Kondratiev waves in the world GDP dynamics at an acceptable level of statistical significance. [2]
[20]

Korotayev et al. also detected shorter business cycles, dating the Kuznets to about 17 years

and calling it the third harmonic of the Kondratiev, meaning that there are three Kuznets cycles
per Kondratiev.

Leo A. Nefiodow shows that the fifth Kondratieff ended with the global economic crisis of 20002003, while the new, sixth Kondratieff started simultaneously.[21] According to Leo A. Nefiodow the
carrier of this new long cycle will be health in a holistic sense- including its physical,
psychological, mental, social, ecological and spiritual aspects; the basic innovations of the sixth
Kondratieff are "psychosocial health" and "biotechnology". [22]
More recently the physicist and systems scientist Tessaleno Devezas advanced a causal model
for the long wave phenomenon based on a generation-learning model [23] and a nonlinear dynamic
behaviour of information systems.[24]In both works a complete theory is presented containing not
only the explanation for the existence of K-Waves, but also and for the first time an explanation
for the timing of a K-Wave (60 years = two generations).
A specific modification of the theory of Kondratieff cycles was developed by Daniel mihula.
mihula identified six long-waves within modern society and the capitalist economy, each of
which was initiated by a specific technological revolution: [25]

1. (16001780) The wave of the Financial-agricultural revolution

2. (17801880) The wave of the Industrial revolution

3. (18801940) The wave of the Technical revolution

4. (19401985) The wave of the Scientific-technical revolution

5. (19852015) The wave of the Information and telecommunications revolution

6. (20152035?) The hypothetical wave of the post-informational technological revolution

Unlike Kondratieff and Schumpeter, mihula believed that each new cycle is shorter than its
predecessor. His main stress is put on technological progress and new technologies as decisive
factors of any long-time economic development. Each of these waves has its innovation phase,
which is described as a technological revolution and anapplication phase in which the number of
revolutionary innovations falls and attention focuses on exploiting and extending existing
innovations. As soon as an innovation or a series of innovations becomes available, it becomes
more efficient to invest in its adoption, extension and use than in creating new innovations. Each
wave of technological innovations can be characterized by the area in which the most
revolutionary changes took place ("leading sectors").
Every wave of innovations lasts approximately until the profits from the new innovation or sector
fall to the level of other, older, more traditional sectors. It is a situation when the new technology,
which originally increased a capacity to utilize new sources from nature, reached its limits and it is
not possible to overcome this limit without an application of another new technology.
For the end of an application phase of any wave there are typical an economic crisis
and stagnation. The economic crisis in 20072010 is a result of the coming end of the "wave of

the Information and telecommunications technological revolution". Some authors have started to
predict what the sixth wave might be, such as James Bradfield Moody and Bianca Nogrady who
forecast that it will be driven by resource efficiency and clean technology.[26] On the other hand,
mihula himself considers the waves of technological innovations during the modern age (after
1600 AD) only as a part of a much longer chain of technological revolutions going back to the
pre-modern era.[27] It means he believes that we can find long economic cycles (analogical to
Kondratiev cycles in modern economy) dependent on technological revolutions even in
the Middle Ages and the Ancient era.