Monday, January 30, 2012

Economic cycles and cyclical crises

Cyclical crises are one of the features of capitalism. These cyclical crises are related to economic cycles, which are the fluctuations observed in economic activities. Since the beginning of the Industrial Revolution, several experts studied the evolution of economy and they observed some kind of cycles or events that repeated from time to time. The typical economic cycle (also called business cycle) includes the following stages: expansion, crisis, recession and recovery.

These are the most important facts in the history of study of cyclical crises:

-      In 1819 Jean Charles Léonard de Sismondi was the first to tell that there were periodic economic crises related to overproduction and underconsumption.

-        In 1860 Clement Juglar observed economic cycles of 7-11 years.

-      Joseph Schumpeter systematized the studies of different economists about cyclical crises and their explanations. Apart from Juglar´s cycles, Schumpeter added  Kitchin´s inventory cycle (3-5 years), Kuznets´s infrastructural investment cycle (15-25 years) and Kondratiev´s waves(45-60 years)

Karl Marx, the most important theorist of scientific socialism, dedicated a lot of time to study capitalist crises and he concluded that they would be more and more serious, working conditions would get worse would  and this would lead to a proletarian revolution.