Capitalism and Democracy

Capitalism and Democracy

A Fragile Alliance

New Horizons in Institutional and Evolutionary Economics series

Theo C.M.J. van de Klundert

Capitalism is driven by technological revolutions, leading to alternating periods of regulation and deregulation in leading economies. Technologically backward countries face a different situation as they have to catch up with the leaders. Against this backdrop, Theo van de Klundert examines the relationship between capitalism and democracy, combining economic theory and historical description to analyse long-run economic development. Emphasis is placed on the interrelation between economic and political power, and a robust state-of-the-art overview of today’s political economy is presented.

Chapter 5: The long wave

Theo C.M.J. van de Klundert

Subjects: economics and finance, economic psychology, institutional economics, political economy

Extract

The idea that economic developments are characterized by a superimposition of cycles of a different length and amplitude appeals to one’s imagination. In this context, a special fascination proceeds from the possible existence of a dominant long wave, featured by a length of approximately 50 years. Several authors are of the opinion to have detected such a long wave. Nikolai Kondratieff (1892–1938) is considered the pioneer in this area. This Russian economist was executed by the Stalinist regime in 1938. Kondratieff (1926) showed that economic indicators, such as prices, interest rates, international trade and coal production exhibit a long wave. Others had preceded him in this respect, such as, for example, the Dutch scientists Jacob van Gelderen (1913) and Salomon de Wolff (1924). Kondratieff, who did not possess any knowledge of the work of his predecessors, took the credit, owing to the appreciation of the famous economist Joseph Schumpeter (1939). Therefore, waves of approximately 50 years in time series of economic variables are known as Kondratieff waves (or, simply, K-waves).

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