Long Waves of Capitalist Development
Book
* Book: Long Waves of Capitalist Development. A Marxist Interpretation. by Ernest Mandel. Verso (Penguin/Random House), 1995
URL = https://www.versobooks.com/books/614-long-waves-of-capitalist-development
"In this revised and expanded edition of Long Waves of Capitalist Development, Ernest Mandel seeks to explain the underlying determinants of the booms and slumps of the trade cycle. Mandel first establishes that there have indeed been twenty- to twenty-five-year-long waves of capitalist expansion and contraction—and that these have persisted in the period since World War II. He then assembles evidence to show that while broad tendencies in the rate of profit have been decisive in triggering downturns, the ingredients necessary for a new upswing are, by contrast, generally political and extra-economic in character. He thereby demonstrates the falsity of neo-liberal doctrines, according to which the free market will itself generate a new formula for balanced and sustainable expansion.
Long Waves of Capitalist Development not only offers a penetrating analysis of the ills that have afflicted contemporary capitalist economies but also surveys, and takes forward, one of the classical debates of modern economic history."
Article
* Article: Long Waves of Capitalist Development: An Empirical Investigation. Deepankar Basu. December 18, 2016
Abstract:
"In this paper, I investigate the phenomenon of long waves of capitalist development from two perspectives. First, I look for evidence of long waves of economic growth taking the dates for turning points of long waves from the historical literature (Mandel, 1995). Using historical data for 20 capitalist countries from the Maddison-Project, I find that the growth rate of real per capita GDP (and real GDP) is significantly higher in the upswing than in the downswing phase of long waves. I interpret this as evidence of long waves of economic activity. Second, I revisit the method used by Gordon, Weisskopf and Bowles (1983) to identify long waves, using historical data on the U.S. economy from Duménil and Lévy (2013). I use this definition of long waves to test their hypothesis that business cycle downturns are “reproductive” during the upswing phase and “non-reproductive” during the downswing phase of long waves. I find evidence in support of the hypothesis."
Excerpt
Long-wave timeline
Deepankar Basu:
"To identify the turning points of long waves before 1980, I draw on qualitative evidence from the historical literature summarized in Mandel (1978; 1995); for turning points after 1980, I draw on qualitative evidence presented in Kotz (2009). Together, this literature highlights the following 4 long waves since the middle of the 19th century:
• Long Wave 1 (1848-1893): composed of the upswing during 1848-1873, and the downswing from 1874 to 1893;
• Long Wave 2 (1894-1948[40]): composed of the upswing from 1894 to 1913, and the downswing from 1914 to 1948 (1940 in non-European countries);
• Long Wave 3 (1949[41]-1982: composed of the upswing from 1949(41) to 1967, and the downswing from 1968 to 1982;
The Social Structure of Accumulation Approach To Long Waves of Capitalist Development: Reproductive vs Non-Reproductive Business Cycles
Deepankar Basu:
"Within the Marxist tradition itself, one can discern at least two different, though related, approaches. The first approach, which I will call the traditional Marxist approach, identifies turning points of long waves by relying on qualitative evidence from the historical literature, and uses changes in the average pace of economic activity, measured by changes in the growth rate of output (or exports), as evidence of long waves of capitalist development.
Long waves, in this approach, are generated by fluctuations in the pace of capital accumulation, the latter determined, in turn, by fluctuations in the rate of profit. For this approach, the transition from a long wave downturn to a new long upturn is caused by extra-economic factors like wars, revolutions, spatial expansion of capitalism, and imperialism. The second Marxist approach is associated with the social structure of accumulation (SSA) approach in Marxist political economy that was developed in the United States in the late 1970s (see, e.g., Gordon, 1980; Gordon, Edwards and Reich, 1982; Gordon, Weisskopf and Bowles, 1983). In this approach, a matrix of institutions that impinge on the capital accumulation process – institutions that govern the capital-labour relation, the process of inter-capitalist competition, the provision of money and credit, and other such institutions – is identified as a SSA, and long waves of capitalist development are associated with the succession of SSAs. Once in place, an SSA provides stability to profitability expectations, which, in turn, spurs capital accumulation and economic growth. This upswing phase gradually erodes the conditions that anchor profitability expectations, and gives place to a long downswing phase. A construction of a new SSA, that is the result of political, economic and social factors, is required to initiate the next long wave. Within this general SSA framework of analysis, Gordon, Weisskopf and Bowles (1983) offer an interesting and theoretically grounded way of identifying upswing and downswing phases of long waves. To differentiate the upswing and downswing phases of long waves, they differentiate between reproductive and non-reproductive business cycle downturns. They argue that business cycle downturns that are associated with increases in the expected profit rate should be understood as “reproductive” cycles because these cyclical downturns endogenously restore profitability expectations; in an analogous manner, cyclical downturns that do not display this property could be classified as “non-reproductive” cycles. This leads them to suggest that the upswing phase of a long wave is composed of (possibly a sequence of) reproductive business cycles, and the downswing phase is composed of (again, possibly a sequence of) non-reproductive business cycles. Gordon, Weisskopf and Bowles (1983) also advance a hypothesis about the mechanism that drive the reproductive and non-reproductive cycles: changes in the reserve army of labour is restorative of profitability expectations in one case (reproductive cycle), but stops working in the other (non-reproductive cycle). Thus, increases in the unemployment rate, understood as a proxy for changes in the size of the reserve army of labour, should be positively associated with changes in expected profitability during reproductive cycles; no such association should be seen for non-reproductive cycles.