Kondratiev wave
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In economics, Kondratiev waves, also called cycles or surges, occasionally also referred to as the K-waves, are the term for a regular S-shaped cycle in the modern world economy. Fifty to sixty years in length, it consists of an alternation of periods of high sectoral growth with periods of slower growth. The pattern is more visible in international production data than in individual national economies and concerns output rather than prices. Some economists divide the Kondratiev wave into two 'seasons'; the Kondratiev Fall and the later part, the Kondratiev Winter. A bull market is associated with 'fall' and a bear market with 'winter'. More common today is the division into four periods with a turning point (collapse) between the first and second two.
The Russian economist Nikolai Kondratiev (1892-1938) was among the first to bring forward these observations in the 1920s. Two Dutchmen by the names of J. van Gelderen (1891-1940) and Samuel de Wolff, point to the existence of 50 to 60 year cycles previously in 1913. Since these two only wrote in Dutch, their ideas became known more generally only recently. Early on four schools of thought emerged as to why capitalist economies have these longwaves. These schools of thought revolved around innovations, capital investment, war and capitalist crisis.
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 50-54 years. Since first originated, various studies have expanded the range of possible cycles, finding longer or shorter cycles in the data.
The theory is not accepted by most neo-classical ("standard textbook") economists, who necessarily see technical change and innovation as exogenous rather than endogenous to economics, but it is one of the bases of innovation-based, development, and evolutionary economics, i.e. the main heterodox stream in economics. Among ones who accept it, there has been no universal agreement about the start and the end years of particular waves, but most cycle theorists agree with the "Schumpeter-Freeman-Perez" paradigm of five waves so far since the industrial revolution, and the sixth one to come. These five cycles are
- The Industrial Revolution--1771
- The Age of Steam and Railways--1829
- The Age of Steel, Electricity and Heavy Engineering--1875
- The Age of Oil, the Automobile and Mass Production--1908
- The Age of Information and Telecommunications--1971
According to this theory, we are currently at the turning-point of the 5th Kondratiev.