The outstanding scientist and economist of the 20th century, Nikolai Dmitrievich Kondratiev, is famous for the fact that he developed the theory of large cycles, also known as long waves. The theory is based on the results of a statistical study of cycles lasting from 48 to 55 years. He was also shown the relationship of fluctuations of various durations and the factors that influence these processes.
The large cycles of Kondratiev allow us to see the general laws of economic development of both a single country and the global process as a whole. Transitions between phases of a large cycle are mainly associated with structural economic transformations and scientific and technological coups.
The economic cycles of Kondratiev were established empirically. The scientist analyzed the dynamics of changes in some macroeconomic indicators in the following countries: England, Germany, France and the USA. When considering, a period was taken - the end of the 18th century and until the beginning of the 20th century. The basis of the consideration was parameters such as the price in the form of an index of commodity prices, interest on capital, wages for workers in industry and agriculture, foreign trade, the results of production of certain types of products (cast iron, lead, coal and steel) and some others. After obtaining the results of the study, Kondratiev revealed a cyclic fluctuation of these parameters over 48-55 years. Kondratiev’s cycles almost coincide in time, however, for some, there are still discrepancies up to five years. When conducting a similar analysis in the field of consumption, the scientist could not find such cycles.
Despite a rather long period of time of the analyzed indicators (about 140 years), this amounted to only two and a half waves of a large cycle. But even this period was enough for Kondratyev to formulate his theory.
The large cycles of Kondratiev are universal in nature and can be used not only in developed countries. They can be used to analyze both the production and other areas of human civilization (for example, education and culture). Also, with their help, you can understand that the "repetition" of certain stages is already impossible for several decades.
Kondratiev cycles have a number of characteristic features:
- before the start of each new cycle, certain changes take place in the economic life of any society (breakthroughs in technology, changes in foreign trade and the structure of the circulation of funds);
- during one long cycle, one can observe several shorter ones, due to which the economic downturns are short-term in the ascending stage, and the ups are quite intense. At the descending stage - everything happens exactly the opposite;
- during the rising waves, Kondratiev noted major military events.
- with a descending wave - a deep depression in an industry such as agriculture.
Kondratiev's cycles have the correctness of time intervals for a reason. For example, the emergence of new technologies does not occur randomly, but in accordance with the increasing needs of the current situation. That is why large cycles, the timing of their beginning and end are not random, but have certain patterns that are characteristic of an effective global economy.
Also in this theory, the scientist was able to show the connection of the processes of using fixed capital (compensation and depreciation), the cyclical nature of investments with price dynamics. Changes in the mechanism of price formation can actively influence the corresponding changes in the main parameters of the national economy.