82. ECONOMIC THEORY OF N. D. KONDRATIEVA

N. D. Kondratiev (1892-1938) - an outstanding Russian economist. Brought worldwide fame N. D. Kondratiev theory he developed large business cycles, known as Kondratieff's theory of "long waves".

Kondratiev conducted the processing of time series of the most important economic indicators (commodity prices, interest on capital, wages, foreign trade turnover, etc.) for four countries (England, Germany, USA, France) over a period of approximately 140 years.

As a result of data processing, he revealed a trend showing the existence of large periodic cycles duration from 48 to 55 years old. These cycles included a boom phase and a bust phase. Kondratiev believes that long cycle time is determined by the average life of production and infrastructure facilities (approximately 50 years), which are one of the main elements of capital goods of society. At the same time, the renewal of “basic capital goods” does not occur smoothly, but in spurts, and scientific and technical inventions and innovations play a decisive role in this.

In the dynamics of economic cycles, Kondratyev identified some regularities. So, "upward" phase of a large cycle (rise phase) occurs, in his opinion, following conditions:

1) high intensity of savings;

2) the relative abundance of supply and cheapness of loan capital;

3) its accumulation at the disposal of powerful financial and business centers;

4) the low level of commodity prices, which stimulates savings and long-term investment of capital. If these conditions are met, then sooner or later a moment comes when a significant investment in large facilities, causing radical changes in the conditions of production, becomes quite profitable. A period of relatively grandiose new construction begins, when the accumulated technical inventions find their wide application, when new productive forces are created. Thus, the intensive accumulation of capital is not only a prerequisite for the economy to enter a phase of a long recovery, but also a condition for the development of this phase.

The impulse for the transition to the "downward" phase (decline phase) is the lack of loan capital, leading to an increase in loan interest, and ultimately to the curtailment of economic activity and falling prices. At the same time, the depressive state of economic life is pushing for the search for new ways to reduce the cost of production, namely, technical inventions. However, these inventions will be used already in the next "upward" wave, when the abundance of free money capital and its cheapness will make radical changes in production profitable again.

In this case, Kondratiev emphasizes that free money capital and low interest are a necessary but not sufficient condition for the transition to the "upward" phase of the cycle. It is not the accumulation of money capital in itself that brings the economy out of depression, but its activation of the scientific and technological potential of society.

Author: Tatarnikov E.A.

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