|Cycle/Wave Name||Period (years)|
|Juglar fixed investment||7–11|
|Kuznets infrastructural investment||15–25|
- 1 History of concept
- 2 Characteristics of the cycle
- 3 Explanations of the cycle
- 4 Modern modifications of Kondratiev theory
- 5 Criticism of long cycles
- 6 See also
- 7 References
- 8 Further reading
- 9 External links
History of concept
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. Two Dutch economists, Jacob van Gelderen and Samuel de Wolff, had previously argued for the existence of 50- to 60-year cycles in 1913.
In 1939, Joseph Schumpeter suggested naming the cycles "Kondratieff waves" in his honor.
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 20–25 years.
The historian Eric Hobsbawm wrote of the theory: "That good predictions have proved possible on the basis of Kondratiev Long Waves—this is not very common in economics—has convinced many historians and even some economists that there is something in them, even if we don't know what." 
Characteristics of the cycle
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. Writing in the 1920s, Kondratiev proposed to apply the theory to the 19th century:
- 1790–1849 with a turning point in 1815.
- 1850–1896 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
Technological innovation theory
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.
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 Louçã (2001) and Carlota Perez.
Perez (2002) places the phases on a logistic or S curve, with the following labels: beginning of a technological era as irruption, the ascent as frenzy, the rapid build out as synergy and the completion as maturity.
Because people have fairly typical spending patterns through their life cycle, such as 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. 
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.
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 and Steve Keen.
Modern modifications of Kondratiev theory
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.
The technological cycles can be labeled as follows:
- The Industrial Revolution—1771
- The Age of Steam and Railways—1829
- The Age of Steel and Heavy Engineering—1875
- The Age of Oil, Electricity, the Automobile and Mass Production—1908
- The Age of Information and Telecommunications—1971
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. By the 1850s the U. S. was becoming industrialized.
Several papers on the relationship between technology and the economy were written by researchers at the International Institute for Applied Systems Analysis (IIASA). A concise version of Kondratiev cycles can be found in Robert Ayres (1989) in which he gives a historical overview of the relationships of the most significant technologies. Cesare Marchetti published on Kondretiev waves and on diffusion of innovations. Arnulf Grübler’s 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. Grübler devotes a chapter to the long economic wave. 
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. 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.
More recently the physicist and systems scientist Tessaleno Devezas advanced a causal model for the long wave phenomenon based on a generation-learning model and a nonlinear dynamic behaviour of information systems. 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 Šmihula. Šmihula identified six long-waves within modern society and the capitalist economy, each of which was initiated by a specific technological revolution:
- 1. (1600–1780) The wave of the Financial-agricultural revolution
- 2. (1780–1880) The wave of the Industrial revolution
- 3. (1880–1940) The wave of the Technical revolution
- 4. (1940–1985) The wave of the Scientific-technical revolution
- 5. (1985–2015) The wave of the Information and telecommunications revolution
- 6. (2015–2035?) The hypothetical wave of the post-informational technological revolution
Unlike Kondratieff and Schumpeter Šmihula believed that each new cycle is shorter than its predecessor. The 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 an application 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 2007–2010 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. On the other hand, Šmihula 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. 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.
Criticism of long cycles
Long wave theory is not accepted by most academic economists, but it is important for innovation-based, development, and evolutionary economics. Among economists who accept it, there has been no universal agreement about the start and the end years of particular waves. This points to a major criticism of the theory: that it amounts to seeing patterns in a mass of statistics that aren't really there.
Moreover, there is a lack of agreement over the cause of this phenomenon. Health economist and biostatistician Andreas J. W. Goldschmidt searched for patterns and showed in 2004 phase shift and overlap of the so-called Kondratjev cycles of IT and health (shown in the figure). He says that historical growth phases in combination with key technologies does not necessarily imply the existence of regular cycles in general. Goldschmidt is of the opinion that different fundamental innovations and their economic stimuli do not exclude each other, they mostly vary in length, and their benefit is not applicable to all participants in a "market“. 
- Business cycles
- Kuznets swing
- Market trends
- Grand Supercycle (Elliott Wave theory)
- Martin A. Armstrong
- Clustering illusion
- Second Industrial Revolution
- Spending wave
- Technological revolution
- The term long wave originated from a poor early translation of long cycle from Russian to German. Freeman, Chris; Louçã, Francisco (2001) pp 70
- See, e.g. Korotayev, Andrey V.; Tsirel, Sergey V. (2010). "A Spectral Analysis of World GDP Dynamics: Kondratiev Waves, Kuznets Swings, Juglar and Kitchin Cycles in Global Economic Development, and the 2008–2009 Economic Crisis". Structure and Dynamics 4 (1): 3–57.
- Vincent Barnett, Nikolai Dmitriyevich Kondratiev, Encyclopedia of Russian History, 2004, at Encyclopedia.com.
- Erik Buyst, Kondratiev, Nikolai (1892–1938), Encyclopedia of Modern Europe: Europe Since 1914: Encyclopedia of the Age of War and Reconstruction, Gale Publishing, January 1, 2006.
- Hobsbawm (1999), pp. 87f.
- Perez, Carlota (2002). Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages. UK: Edward Elgar Publishing Limited. ISBN 1-84376-331-1.
- Tylecote, Andrew (1991). The Long Wave in the World Economy. London: Routledge. pp. Chapter 5: Population feedback. ISBN 0-415-03690-9.
- Clark, Ross (20 January 2008), "The man who predicted today's housing woes – ten years ago", The Mail on Sunday
- "Fred Foldvary". Foldvary.net. Retrieved 2013-03-26.
- Minsky, Hyman (1992). "The Financial Instability Hypothesis". Jerome Levy Economics Institute Working Paper No. 74. SSRN 161024.
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- Table 7: Ten leading industries in America, by value added, 1914 prices (millions of 1914 $'s)
- North, Douglas C. (1966). The Economic Growth of the United States 1790–1860. New York, London: W. W. Norton & Company. ISBN 978-0-393-00346-8.
- See: Joseph Whitworth's quote under American system of manufacturing#Use of machinery.
- Ayres, Robert (1989). "Technological Transformations and Long Waves" (PDF).
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- Grübler, Arnulf (1990). The Rise and Fall of Infrastructures: Dynamics of Evolution and Technological Change in Transport (PDF). Heidelberg and New York: Physica-Verlag.
- Spectral analysis is a mathematical technique that is used in such fields as electrical engineering for analyzing electrical circuits and radio waves to deconstruct a complex signal to determine the main frequencies and their relative contribution. Signal analysis is usually done with equipment. Data analysis is done with special computer software.
- Devezas, Tessaleno (2001). "The Biological Determinants of long-wave behaviour in socioeconomic growth and development, Technological Forecasting & Social Change 68, pp. 1–57".
- Devezas, Tessaleno; Corredine, James (2002). "The nonlinear dynamics of technoeconomic systems - An informational interpretation, Technological Forecasting and Social Change, 69, pp. 317–357".
- Šmihula, Daniel (2009). "The waves of the technological innovations of the modern age and the present crisis as the end of the wave of the informational technological revolution". Studia politica Slovaca (Bratislava) 2009 (1): 32–47. ISSN 1337-8163.
- Moody, J. B.; Nogrady, B. (2010). The Sixth Wave: How to succeed in a resource-limited world. Sydney: Random House. ISBN 9781741668896.
- Šmihula, Daniel (2011). "Long waves of technological innovations". Studia politica Slovaca (Bratislava) 2011 (2): 50–69. ISSN 1337-8163.
- Goldschmidt, Andreas JW; Hilbert, Josef (2009). Health Economy in Germany - Economical Field of the Future (Gesundheitswirtschaft in Deutschland - Die Zukunftsbranche). Germany: Wikom Publishing house, Wegscheid. p. 22. ISBN 978-3-9812646-0-9.
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