“The existence of long-term economic “ups” and “downs” is beyond doubt. The history of any country, taken over a sufficiently long period of time, shows this with a high degree of certainty. P. A. Sorokin USE social science. phase

It has long been noted that cyclical fluctuations occur in the economy. The researchers decided to determine the causes of these fluctuations, their consequences and possible ways to influence this process.

Many different theories have been developed, some even claiming the possibility of eliminating oscillations.

What is the "economic cycle", what are the phases in the economic cycle and their description - we will consider in this material.

Business cycle and business cycle phases

In the late 1960s American President L. Johnson stated the following: “We got rid of the cyclical downturns that for many decades pushed us off the path of growth and progress. In the 60s. we have adopted a new strategy to prevent cyclical fires before they start.”

Objective reality turned out to be stronger than scientific forecasts. At present, none of the serious scientists-economists disputes the existence of the cyclical dynamics of the market economy.

Now that the foundations of market relations have been formed in Russia and the process of reproduction is becoming more and more cyclical, this problem will be of interest not only to a narrow circle of theoretical specialists, but also to a wide range of practical workers, and primarily entrepreneurs, heads of state enterprises, many government figures and entire institutions.

The purpose of this publication is to reveal the objective causes of cycles, their nature, to show the impact of cyclical fluctuations on national production and employment.

Business cycle

Economic cycle (business cycle) - regular fluctuations in the levels of production, employment and income, usually lasting from 2 to 10 years. The reasons are: periodic depletion of autonomous investments; weakening the effect of animation; fluctuations in the volume of money supply; renewal of fixed capital, etc. Economic development is always associated with an imbalance, with a deviation from the average indicators of economic dynamics. The most striking manifestations of instability are inflation (increase in the price level, depreciation of the national currency) and unemployment (low level of production and employment).

Cycles can be caused by a shift in aggregate supply. The most famous case is the oil shock of the 1970s, which led to an increase in world prices by almost 10 times. A favorable supply shock occurred in the US in 1992-1993. as a result of unusually large productivity gains, stimulated by the process of unbundling of enterprises and the widespread use of information technology.

The cycle can be divided into two periods: descending (fall in production) and ascending (growth in production). Since economic booms and busts, which are the essence of the business cycle, play a key role in fluctuations in economic (business) activity, economists refer to such cycles as business cycles.

Real GDP can deviate from nominal, and these fluctuations are captured by the GDP deflator. Fluctuations in actual output around potential GDP are characterized by an indicator called GDP gap(gap GDP):

gap GDP = (Y - Y*) / Y*

where Y is the actual volume of production; Y* - potential production volume.

Potential GDP is the amount of output that is achieved at full employment of resources.

Full employment of resources is possible in the absence of cyclical unemployment, i.e., a natural unemployment rate of 5.5-6.5% of the total labor force and an unloaded production capacity of 10-20% are assumed. These figures may vary from country to country, but in all cases full employment of resources means only structural unemployment.

Phases of the business cycle

On closer examination, the economic cycle is a single process that successively passes through four phases: rise (expansion), recession (crisis), depression, revival.

expansion phase

expansion phase begins with the active commissioning of new enterprises and the modernization of old ones, the growth of production volumes, employment, investment, personal income, an increase in demand and prices, and ends with a boom - a period of super-high employment and overload of production capacities. During a boom, the price level, the wage rate and the interest rate are very high. At the highest point of the cycle, called the peak, all of these indicators reach their maximum value.

Fall phase

Recession phase, crisis. The inevitable consequence of the boom is a turn in the development of the cycle, when the growth of production is replaced by its decline. This indicates the onset of a crisis phase. The increase in unrealizable commodity stocks leads to a decrease in production volumes. Industrial investment is reduced, and, consequently, the demand for labor is falling. This means an increase in unemployment, a reduction in the length of the working week. The demand for raw materials falls, and then the supply of raw materials. There is a sharp decrease in profits, the demand for credit is weakening, and interest rates are falling. Finally, if the recession is deep and prolonged, there is a reduction or slowdown in the growth of commodity prices.

Depression phase

IN phase of depression the decline in GDP and the increase in unemployment are significantly slowing down, the volume of investment is close to zero. Therefore, during this period, the economy is characterized by stagnation in production, sluggish trade, and the presence of a large mass of free money capital. After a certain time, the economic system overcomes the lowest point of the cycle, called the trough, and recovery begins. Under him, the movement of all economic indicators changes direction, income and employment begin to grow again. When enterprises bring the volume of production to the highest point reached in the previous cycle, then an economic recovery begins.

What reproductive functions do these phases of the economic cycle perform?

The main phase of the cycle is the crisis (decline in production), since it is a mechanism for the destruction of old proportions, creating conditions for the future development of production. The crisis performs its "cleansing" function with the help of the price mechanism. In the crisis phase, commodity prices for obsolete products fall, interest rates fall, stock prices fall, company profits decrease, and many of them suffer losses, which causes a wave of bankruptcies.

But a crisis economy does not mean a bad economy. The crisis itself contains the possibility of overcoming it. The crisis first of all eliminates its immediate cause - the overaccumulation of capital, since in the crisis phase the economy gets rid of part of the fixed capital by depreciating and even destroying it. This stimulates the beginning of a mass renewal of production capital on a new technical basis. In a crisis, no entrepreneur can wait for the complete physical deterioration of machinery and equipment - the crisis forces everyone to carry out the widespread replacement of many elements of fixed capital. As a result, new demand is automatically born.

Crisis, as already noted, is followed by depression. Outwardly, it manifests itself in a slowdown in the rate of decline, stagnation in bankruptcies, a decrease in commodity stocks, etc. Its reproductive function is an adaptation to new built proportions. In the depression phase, the goal facing firms (profit maximization) becomes tempting again, as there has been a reduction in production costs.

Recovery phase

At revival When prices, wages, employment, interest rates, etc. gradually rise, massive investments are made to ensure expanded reproduction. Thus, the function of revival is to carry out expanded reproduction and achieve, through this, the pre-crisis level of production.

In a boom, when production is driven entirely by the pursuit of profit (while demand is dominated by wages), supply increasingly outstrips demand, setting the stage for a future downturn. This means that the rise also performs the corresponding reproductive function: production strains its forces, going beyond the limits of effective demand, which intensifies the contradictions in the mechanism of reproduction.

Features of economic cycles in modern conditions

Cyclicity in the development of a market economy has been observed for nearly 200 years. The first industrial crisis broke out in England in 1825, then in 1836 in the same place, but was also observed in the USA. In 1841, the United States again experienced a crisis. In 1847, the crisis again engulfed the United States, as well as England, France and Germany. The crisis of 1857 was the first world cyclical crisis. Then followed the crises of 1873, 1882, 1890. The most devastating was the crisis of 1900-1901. It began almost simultaneously in Russia and the USA and first of all hit the metallurgical industry. Having hit the American metal market, the crisis spread to England, then to Europe, causing a significant drop in production in the textile, construction, chemical and engineering industries. The recession was followed by a significant decline in prices for the products of these industries.

The worst crisis

In 1929-1933. Western economies experienced the most severe crisis in their history - great depression, which led to a drop in production by 40-50% and an increase in the unemployment rate to 25%.

In the subsequent period, market economies have repeatedly faced both crises and economic upswings, but the nature of cyclical fluctuations and their duration have changed significantly.

Thus, an analysis of 35 cycles observed in the United States from 1834 to 1982 shows that, firstly, the duration and structure of economic cycles are subject to constant changes. Therefore, although economic cycles are a constantly recurring phenomenon, they still cannot be represented as business waves of a certain duration, as regular as ocean tides or sunrise and sunset.

As noted in the literature, in their irregularity, business cycles are more like changes in the weather than the cycles of the rotation of the planets or the pedals of a bicycle. Secondly, after the Second World War, the amplitude of fluctuations in economic activity decreased: recession phases are shorter, while production boom phases are longer.

If in 1854-1938. the US economy was in a phase of decline in production 45% of the entire calendar time, then in 1945-1989. recession phases took only 26% of the calendar time. At the same time, the amplitude of fluctuations in production volumes also decreased.

GDP growth in the recovery phase decreased from 30.1% in 1919-1938. to 20.9% in 1948-1982, and its reduction in the recession phase decreased from 14.1 to 2.5%. The recession of 1990-1991, which lasted almost 9 months, led to a reduction in real GDP by only 1.4%. This recession was shorter and more moderate than the previous two recessions of 1973-1975. and 1981-1982

The cyclical development of the economy has a different effect on the state of various industries. The industries producing capital goods and consumer durables (cars, furniture, household appliances) are most affected by the recession. This is because, during times of economic hardship, people tend to put off purchasing such goods in favor of saving money and using it to meet more pressing needs. In this case, the fall in demand for expensive products leads to a reduction in production and employment in the relevant industries.

Observations of the course of economic cycles show that in modern conditions the picture of the cycle is significantly modified. But the nature of modification is not limited to changing the duration of recessions (recessions) and rises (booms). The very configuration of the cycle, its reproductive functions, are changing, which significantly distinguishes the current cycle from the classical cycle, that is, from the cycle of free competition.

In the classical cycle, as already noted, the initial and key phase is the crisis. It is not only a form of temporary resolution of urgent problems and contradictions in a market economy, but also a condition for the progressive renewal of fixed capital, reducing production costs, updating and improving quality, and also the competitiveness of products.

The classical crisis fulfilled its "cleansing" function mainly through the price mechanism (in the 19th century, during the crisis, prices fell much more than the volume of production). The decline in prices for goods and factors of production served as the basis for establishing new price proportions. Adaptation to them was carried out primarily in the course of the depreciation of fixed capital. When there was a process of mass renewal of capital, prices rose again.

What qualitative changes have the modern cycle undergone, especially the crisis phase? When answering this question, it must be borne in mind that a number of special factors have a significant impact on the modern business cycle:

monopolistic structure of markets;
state regulation of the economy;
scientific and technical progress;
the process of globalization (internationalization) of production.

Influence of monopoly

The influence of the monopoly is manifested in the fact that the decline in production, its stop occurs while maintaining monopoly high prices. Observations show that not a single post-war cycle (except the cycle of 1948-1949) is associated with falling prices. The scale of appreciation grows from crisis to crisis (ie from cycle to cycle).

Since prices do not fall, firms manage to make a profit even if production is reduced. At the same time, the persistence of a high level of prices makes it difficult to process a one-time massive renewal of capital. Therefore, in modern conditions, the crisis cannot fully fulfill its "cleansing" function, does not become the starting point for a massive renewal of equipment and technology, and therefore does not contribute to ridding the economy of the old production apparatus.

State regulation of the economy

The regulatory role of the state is manifested in the fact that for counter-cyclical purposes it primarily uses budgetary policy. During the crisis, to stimulate the growth of production, government orders to private enterprises are sharply expanded, as well as state construction.

The state will also activate tax instruments of budgetary policy to regulate capital investment and consumer demand. In the order of counter-cyclical tax regulation, a legislative reduction of taxes is carried out during periods of crisis and their increase during periods of upswings. These methods are called built-in stabilizers because they operate automatically within the economic system. During recessions, tax revenues fall and government spending rises. Taxes go down because sales fall, and spending goes up as unemployment, bankruptcy insurance, etc. rise. During booms, built-in stabilizers work in the opposite direction (taxes go up, transfers go down).

An important instrument of counter-cyclical regulation of the state is the application of credit policy by lowering the interest rate, which is charged by the Central Bank when granting loans to commercial banks. A decrease in the discount rate leads to a decrease in interest rates on all types of loans, including consumer loans, and thus contributes to an increase in investment and expansion of sales on credit, which stimulates production growth.

Scientific and technical progress

The nature of economic cycles is significantly influenced by scientific and technological progress (STP). Increasingly accelerating rates of scientific and technical progress cause an acceleration in the renewal of fixed capital, which is observed in all phases of the cycle, including the crisis phase. As a result, the overproduction of goods, as a characteristic feature of the crisis, is replaced by an overproduction of capital and a chronic underload of production. This leads to the blurring of the classical, phase-by-phase dynamics of the cycle and the cyclical nature of reproduction in general.

Globalization

In the context of the globalization of production under the influence of the international division of labor and the internationalization of economic relations, the cycle began to take on a global character. A crisis in one country entails crisis phenomena in other countries, as a result of which the entire world economy is drawn into cyclical fluctuations. So, in 1974-1975. the leading Western countries simultaneously entered into a global economic crisis of overproduction. In 1987-1989 in all major countries, the cyclical boom also began simultaneously. After a slight recession that lasted less than a year in 1990-1991, the United States and the countries of Western Europe again simultaneously moved to an economic recovery. This is due to the internationalization of production and the transition of countries to a new technological basis of production, which further enhances the international nature of the markets for factors of production (raw materials, materials, equipment, labor) and causes global structural crises.

So, the world economic crisis of 1957-1958. laid the foundation for the global structural crisis of overproduction of raw materials on the world market in 1958-1963. This was facilitated by technological shifts in production, a decrease in material consumption, and the replacement of natural raw materials with synthetic ones. Commodity prices fell by 2 times. Monopoly low prices for crude oil supplied from colonial and dependent countries led to a crisis in the coal industry.

Thus, the market economy, despite the changes, is still subject to cyclical fluctuations. At the same time, as observations show, developed countries managed to avoid depressions that took place in the past, especially in the 1870s, 1890s, and 1930s. This suggests that the market system has become internally more reliable and stable. This did not happen by itself, however, but because of a better understanding of macroeconomic mechanisms, which allows governments to take monetary and fiscal policy measures that prevent recessions from developing into a long, cumulative process.

Economic cycle and phases of the economic cycle. Results

1. Business cycle- one of the key concepts of macroeconomics. The cyclical nature of the economy is inherent in all countries with a market economy and characterizes the process of fluctuating movement in the level of production, investment, employment and income, resulting in a significant expansion or contraction of business activity in most sectors of the economy.

2. Fluctuating economic dynamics, its deviations from the equilibrium line of development (long-term trend) are carried out for various reasons:

economic activity is uneven due to seasonal fluctuations (in summer it fades in a number of sectors of the economy due to holidays, while it intensifies in agriculture);
Demographic fluctuations can have a significant impact on activity, caused, for example, by a noticeable drop in the birth rate or an increase in mortality, as a result of which “demographic pits” are formed, entailing fluctuations in the dynamics of the population, and, consequently, in the level of employment with a period of 20-25 years ;
the source of fluctuations can be the service life during the renewal period of various elements of fixed capital: inventories (3-4 years); machines and equipment (8-10 years); buildings and structures (20-25 years).
- In addition, there are fluctuations that are not of a narrow sectoral nature, but manifest themselves in all areas of economic activity after long periods (about 50 years). Such fluctuations are known in economics as Kondratiev cycles (named after the Russian economist N. Kondratiev). Long waves can also be associated with the unevenness of the scientific and technological revolution.

3. All cycles have the same phases. Despite differences in the duration and intensity of economic cycles, all cycles have the same phases. Economists distinguish, as a rule, four phases of the cycle: rise (boom); crisis (recession); depression (bottom); revival (expansion). The phase of the crisis, which lasts more than six months, is called the economic recession. Deep and prolonged recessions, accompanied by devastating consequences for the economy, are often called depressions (the Great Depression of the 30s). Currently, the concept of depression has fallen into disuse in developed countries and is used only in a historical context.

4. Each phase of the economic cycle performs an important reproductive function. A crisis, accompanied by a decline in production, employment, a decrease in income and costs, ultimately leads to a reduction in the cost of means of production and subsequent stimulation of investment in new enterprises, technologies and equipment.

IN phase of depression production and employment, having reached their minimum values, begin to gradually revive on the basis of new proportions and innovations.

Recovery phase characterized by the beginning of expanded reproduction and the growth of output to the level of the pre-crisis period.

In the ascent phase new enterprises come into operation, unemployment is reduced, wages, investments and the volume of real capital grow. Due to the rapid expansion of production, the demand for credit, lending interest rates rise to the level of the average rate of profit. The boom phase ends with a boom (the highest point of growth), after which, as a result of the imbalances that have arisen, another recession begins.

Thus, despite the fact that crises (recessions) bring considerable economic and human costs, the market economy from cycle to cycle goes to ever higher levels of development, improving not only the material basis, but also the organizational forms of production, distribution, exchange and consumption.

5.In modern conditions, the content and overall picture of the economic cycle are significantly modified. This is manifested, firstly, in a decrease in the amplitude of fluctuations in economic activity (the phases of recession have become shorter, the phases of recovery have become longer; in addition, depression has been avoided, as a result of which a recession is followed by recovery and recovery); secondly, in reducing the range of fluctuations in output and employment levels; thirdly, in strengthening the impact on the economic cycle of the monopolistic structure of markets, scientific and technical progress, the globalization of production, state regulation of the economy.

economic stracification within the group itself. The first phenomenon was expressed in the economic enrichment or impoverishment of social groups as a whole; the second is expressed in a change in the economic profile of the group or in an increase or decrease in the height, so to speak, of steepness, of the economic pyramid. Accordingly, there are the following two types of fluctuations in the economic status of a society: I. Fluctuations in the economic status of a group as a whole

a) an increase in economic well-being; b) a decrease in the latter.

II. Fluctuations in the height and profile of economic stratification within society: a) the rise of the economic pyramid; b) flattening of the economic pyramid.

We begin our study of fluctuations with the economic status of the group.

2. Fluctuations in the economic status of the group as a whole

Whether a group rises to a higher economic level or falls is a question that can be broadly decided on the basis of fluctuations in per capita national income and wealth measured in monetary units. The same material can be used to measure the comparative economic status of different groups. This criterion allows us to make the following assertions.

I. The wealth and income of various societies varies greatly from one country to another, from one group to another. The following figures illustrate this statement. Taking the average level of wealth of Wisconsin in 1900 as 100 units, the corresponding indicators of the average level of wealth for Great Britain (for 1909) - 106; for France (for 1909) - 59; for Prussia (for 1908) - 42 ". In societies like Chinese, Indian, or even more primitive, the difference will be even more significant. The same can be said about the average per capita income2. Operating not with whole nations, but with less wide territorial groups ( province, regions, counties, various districts of the city, villages, including families living in the neighborhood), we will come to the same conclusion: the average level of their material well-being and income fluctuates.

II. The average level of wealth and income in the same society is not constant, but changes over time. Whether it's a family or a corporation, the population of a county or an entire nation, average wealth and income fluctuates up and down over time. There is hardly a family whose income and level of material well-being would remain unchanged for many years and during the life of several generations. Material "ups" and "downs," sometimes sharp and significant, sometimes small and gradual, are normal phenomena in the economic history of every family. The same can be said about larger social groups. In Great Britain, according to the calculations of A. Bowley, "the amount of average income in 1913 was almost one Tpeib more than in 1880; this increase was mainly achieved before the beginning of our century, and since that time it has been on a par with the depreciation money". There is no need to add anything to this data. The income statistics of various European countries, without exception, show the same phenomena of fluctuations in the average annual level of income. The specific forms of manifestation of these fluctuations are different in different countries, but the phenomenon itself is common to all nations.

III. In the history of the family, of the nation, or of any other group, there is no steady tendency either towards enrichment or impoverishment. All well-known trends are fixed only for a limited period of time. For long periods, they can act in the opposite direction. History does not give sufficient grounds for asserting either a trend towards a paradise of prosperity or a hell of poverty. History shows only aimless fluctuations."

The essence of the problem lies in the following: is there a continuous cyclicity in fluctuations in the mean! within the same society? about the level of wealth and income or not. Science does not have sufficient grounds for a definite answer to this question. All that can be done. is to put forward a hypothesis that may or may not be true. With this reservation in mind, let us consider a number of hypothetical statements.

the question arises whether this trend is constant (or is it only part of a "parabola"), which can be replaced by stagnation or even movement in the opposite direction? The second possibility turns out to be more true. If we represent economic development in time schematically, then it will not be a straight line (A), nor a spiral (B), ascending or constantly descending. It is rather closer to the image (B), which does not have any constant direction (see diagram 1).

Here are some arguments in support of this hypothesis.

First of all, we note that the economic history of the family, or corporation, or any other economic organization shows that among such groups there was not a single one that would continuously grow economically. After a short or long period of time, during the lifetime of one or several generations, the upward trend was supplanted by its opposite. Many rich families, firms, corporations, cities, regions in antiquity and in the Middle Ages, and even in modern times, became poor and disappeared from the top of the financial pyramid. Among the existing magnates in Europe and America there are few, if any, except, perhaps, some of the royal families who were rich two or three centuries ago and have been rich continuously all this time. The vast majority, if not all, of the truly wealthy families have emerged in the last two centuries or even the last two decades. All the rich clans of the past have disappeared or become impoverished. This means that after a period of enrichment came a period of impoverishment. It seems that many financial corporations, firms and houses have had a similar fate. If such is the fate of these social groups, why should the fate of the nation as a whole be different?

Secondly, the fate of many nations of the past shows that they repeat the fate of small social groups on a larger scale. However insufficient our knowledge of the economic history of Ancient Egypt, China, Babylon, Persia, Greece, Rome, Venice or other Italian republics of the Middle Ages, the fact remains that all these nations had many "ups" and "falls" in the history of their economic development. prosperity, until at last some of them were impoverished altogether. Hasn't there been the same "ups" and "downs" in the history of modern powers? Were not they also typical of years of acute famine followed by relative prosperity, decades of economic prosperity superseded by decades of disaster, periods of accumulation of wealth followed by periods of waste?

Concerning the economic status of large masses of the population, dissimilar to each other, one can say this with a sufficient degree of certainty. It is known that the economic situation of the masses in ancient Egypt in the period between the 13th and 19th dynasties and after Seti P, and even in the later Ptolemaic period2, deteriorated sharply in comparison with the previous periods3*. Similar periods of famine and impoverishment were observed in the history of ancient and medieval China, which continue to be repeated even today. "Similar fluctuations were in the history of Ancient Greece and Rome. As an example of a major economic decline in many policies of Greece, we can cite the 7th century BC era, then - the time of the end of the Peloponnesian War, and finally, III century BC - Athens became the richest policy after the Greco-Persian wars and poor after the defeat in Sicily. BC) and became poor after the battle of Leuctra (371 BC.) In the history of Rome, as an example of periods of decline, we recall the 2nd-1st centuries BC and the 4th-5th centuries AD. "falls" have occurred repeatedly in the history of the economic condition of the masses in England, France, Germany, Russia and in many other countries. They are well enough known to speak of them in detail. But it is especially important that in many past societies, as well as, however, in the current ones, the final or later stages of history were rather more modest economically than the previous periods. If this is the case, then these historical facts give no grounds for assuming a permanent trend in any direction.

Thirdly, the following calculations also testify against the hypothesis of a continuous increase in wealth over time. One centime, invested at a four percent profit in the time of Jesus Christ, would have brought in 1900 a huge capital, expressed in the amount of 2,308,500,000,000,000,000,000,000,000,000 francs. If we assume that the earth consists of pure gold, then it would take more than 30 "golden" planets in order to provide this huge amount of money. The real situation, as we know, is far from presented. In the time of Christ, huge capitals were concentrated in the hands of individuals, but they nevertheless would not have amounted to a sum of material values even remotely approaching the above. A sum of one hundred thousand francs, invested at a three per cent profit in the time of Christ, would rise to 226 billion francs in the first five centuries, a fortune close to the national wealth of France at the present time, since the real amount of material values is incomparably less than it would be according to these calculations, it follows that the level of their growth was much less than expected and that periods of accumulation of wealth were accompanied by periods of its waste and destruction.

Fourth, the cyclical hypothesis is supported by the fact of business cycles. The existence of "small business cycles" (periods of 3-5, 7-8, 10-12 years) is now beyond doubt.

Different points of view exist only about the duration of the cycle5. "The change that is taking place is a succession of leaps or jerks, periods of rapid growth, followed by periods of stagnation or even decline." But was the progress of the half of the 19th century as a whole part of a larger cycle? Professor N. Kondratiev's theory answers this question In addition to the small cycles mentioned above, he discovered the presence of larger cycles - lasting from 40 to 60 years.2 This is a direct confirmation of the hypothesis that the above-mentioned progressive trend of the second half of the 19th century was? only a part of a long-term cycle. rather than move on to even larger economic changes? If their periodicity is difficult to prove,3 then the existence of long-term economic "ups" and "downs" is not in doubt. The history of any country, taken over a fairly long period of time, shows this with a sufficient degree of certainty.

Sixthly, “the law of income reduction operates inexorably. The more people inhabit our earth, the less each person receives from nature to maintain his existence. After reaching a certain density, large masses of people come to greater poverty. Inventions and discoveries can delay, but cannot prevent the day of reckoning"5. It is true that the birth rate in European countries and in America has fallen, but not so much as to stop the growth of population in them; it is still quite high in the Slavic countries, not to mention the Asian mainland. It is also true that there are more and more inventions, but despite this, they still do not guarantee a high standard of living for everyone in our world, even just in Europe. These reasons explain, in my opinion, why the hypothesis of a continuous increase in average income (or a continuous decrease) is implausible and why the hypothesis of small and large business cycles seems to me more correct. When we are told that the standard of living of the average Parisian is almost as high as that of the King of France, Charles H.U., and when we see the dramatic and astonishing rise of modern production technology, it is indeed hard for us to admit that all this can hit a wall and fall apart. But nevertheless the years of the world war, and especially the years of revolutions, have shown how easily the wealth and even any tiny gains of civilization can be destroyed in a period equal to about a dozen years.

On the other hand, it was our time that happened to discover many civilizations of the past. And the more we study them, the more erroneous is the opinion that supposedly before the 19th century there was nothing but primitive culture and primitive economic organizations. Even civilizations whose age passed many millennia ago were brilliant in certain respects. Yet their brilliance faded, they ceased to prosper, and their riches disappeared. But this does not mean at all that since they were destroyed, the same fate awaits us, just as it does not give reason to think that the current European countries and America are some kind of exception to the rule.

We may be asked: how then to be with the development of progress in a spiral? But if progress is understood as a spiral of constant improvement in the economic situation, then such a hypothesis has not yet been proven by anyone. The only possible proof of this hypothesis is economic progress in some European countries, and even then only in the second half of the 19th century. But, according to the above considerations, this fact does not confirm this hypothesis. To this it should be added that the same trend was not observed at the same time among the majority of Asian, African and other peoples. Moreover, part of European prosperity has been achieved at the cost of exploiting the populations of backward and less developed countries. The aboriginal population of New Zealand in 1844 was 104,000; in 1858, 55,467; and by 1864 their number had dropped to 47,000. The same trend is observed in the demographic processes of Tahiti, Fiji and other parts of Oceania. "And this is only a small fraction of the endless number of such facts. What do they mean and why were they mentioned? Yes, because they convincingly show that instead of improving the level of economic and the social welfare of these peoples was deteriorating and led to their destruction and that the economic prosperity in Europe in the 19th century was due in part to exploitation and colonial plunder.What was good for one group turned out to be destructive for another.Ignore all these groups - hundreds of millions of Indians, Mongolia, Africa, China, the natives of all non-European countries and islands, at least those of them to whom progress in Europe has cost very dearly and who have hardly improved their standard of living in the last century - ignore them and insist on "continuous progress in a spiral "only on the basis of some European countries - means to be completely subjective, biased and a dreamer. Many of the primitive and civilized societies of the past, which ended their economic history in misery and poverty, emphatically do not allow us to speak of any law of progress "in a spiral or not in a spiral" for all societies2. At best, such progress has been a local and temporary phenomenon.

Races and intelligence

Similar information.

From the definition of economic growth, it can be seen that it is long-term, i.e., ideally, there should be a constant increase in GDP. But this does not happen in the real economy: the growth of production and business activity is replaced by a decline in production, a decrease in GDP, then the economy grows again. The economy, therefore, develops cyclically. A sharp drop in production, as you know, is called an economic crisis.

The first economic crisis occurred in England in 1825, and the cyclical crisis of 1857 for the first time affected all the leading countries of the world, becoming a global one. Subsequent crises occurred regularly. They were characterized by a sharp drop in production, bankruptcies of many enterprises, an increase in unemployment, and a decline in the purchasing power of the population. Having reached the lowest point, the economy begins to gradually recover from the crisis: production increases, unemployment decreases, incomes rise, aggregate demand and aggregate supply increase, the economy “overheats” again (i.e., production and consumption reach their maximum), and this leads to another crisis. The economy develops in such cycles.

What is the business cycle?

Business cycle is the alternation of ups and downs in the movement of real GDP.

The economic cycle consists of four phases, successively replacing each other.

The first phase is an economic recovery, which is characterized by the almost full employment of the active population, the constant expansion of the production of all goods and services until all production capacities are used, the growth of incomes, and, consequently, the expansion of aggregate demand. All production indicators reach their peak. At some point, aggregate supply begins to exceed aggregate demand. Manufacturers cannot sell their goods, pay off their creditors and suppliers, bankruptcy begins. Consumers fear layoffs and cut their spending. Trade does not take new goods for sale, industry reduces production and does not demand resources. This is the beginning of the decline.
The second phase is an economic recession, or recession, which is characterized by a reduction in production and consumption, income and investment, and a fall in GDP. Finally, all indicators reach their lowest point - the crisis.
The third phase is depression, when the economy, having reached the bottom, is marking time, because it takes time for it to gradually gain momentum.
The fourth phase is a revival, which is characterized by a gradual increase in production, because demand is growing, industry begins to attract additional labor, trade orders more and more goods, the incomes of the population and the profits of entrepreneurs grow. This phase continues until all indicators reach the peak of the previous boom phase, after which a new boom and a new business cycle begin.

What is the duration of the economic cycle?

This is a very important issue that worries not only theoretical economists, but also politicians, trade union leaders and businessmen. If we knew about the onset of the crisis, we could prepare for it. But, as a rule, crises come suddenly.

In the 19th century the cycle was approximately 8-10 years: crises were observed in 1825, 1836, 1847, 1857, 1866, 1877, 1882 and 1890. K. Marx believed that the material basis for the periodicity of cycles is the replacement of fixed capital, which at that time served for about 10 years. The crisis just gives rise to an incentive for the renewal of fixed capital, on the one hand, and stimulates the phase of recovery on a renewed basis, on the other. In addition, for 10 years, technical progress has not stood still, therefore, the equipment has undergone not only physical, but also moral wear and tear, that is, it is outdated and does not correspond to the new level of technology.

In the XX century. cycles have become shorter and crises, especially after World War II, less acute.

The longest and most destructive crisis of the 20th century. happened in 1929-1933. and became known as the Great Depression. In the US, the decline in production continued for 4 years in a row, real GDP fell by 40%, per capita income fell by 30%, one in four people lost their jobs, and many lost housing, for which there was nothing to pay for. The industry has been particularly hard hit. For example, in the production of pig iron at the lowest point of the crisis, the United States was thrown back by 42 years (in relation to the level of 1890), England - by 76 years (against the level of 1856), Germany - by 45 years (against the level of 1887). ).

Modern crises are not so deep: the decline in production lasts an average of 10-12 months, and the reduction in real production is from 1.5 to 5% (data for the USA). In the United States, economic recessions took place in 1973-1975, 1979-1980, 1981-1982, 1990-1991. The longest boom period in the US lasted from 1982 to 1990, and the shortest from 1980 to 1981.

What are the reasons for the cyclical development of the economy? There is also no single answer to this question among economists.

Some scientists explain economic cycles by external (exogenous) causes:

wars, due to which the economy is reorganized into the production of military products, additional resources and labor are attracted, and after the end of hostilities, a recession occurs;
the influence of some other external factors, for example, the so-called oil currents, when oil-producing countries united in one cartel - OPEC - and sharply raised oil prices, which caused the largest post-war world crisis of 1973-1975, in which the United States the decline in production lasted 16 months and amounted to about 5%;
major innovations (railroads, automobiles, electronics) that have a great impact on investment, production, consumption, price levels;
even sunspots that affect crop yields, and crop failures can lead to a crisis of the entire economy.

Other economists attribute economic cycles to internal (endogenous) factors:

the monetary (monetary) policy of the government: a large amount of money generates an inflationary boom, and an insufficient amount reduces investment and leads to a decline in production;
a change in the ratio of aggregate supply and aggregate demand, when, for example, radically new goods (personal computers) appear and demand switches to them, and manufacturers of old goods (typewriters) have to close production and transfer resources to other industries;
a reduction in production caused by the production of marketable products, i.e., the accumulation of large stocks due to low demand or high prices, when trade refuses goods that it cannot sell, and aggregate supply exceeds aggregate demand.

Whatever the reasons for the existence of business cycles, they continue to affect the economy, although this effect in the modern market economy is not as devastating as it used to be. The state and big business have learned how to influence the economic cycle. Many governments in developed countries are resorting to counter-cyclical methods that smooth out the peaks of development and prevent the economy from sinking to the very bottom. Big business with the help of marketing recognizes long-term trends in demand for certain goods and does not allow their overproduction.

Although economic cycles, and especially the crisis phase, lead to such negative phenomena as unemployment and inflation, there are also positive aspects: it is the crisis that makes it possible to bring aggregate demand and aggregate supply into line, identify the most viable firms and continue the development of the economy on a new technical basis.

1. Two main types of fluctuations

Speaking about the economic status of a certain group, two main types of fluctuations should be distinguished. The first refers to the economic decline or rise of the group; the second - to the growth or reduction of economic stratification within the group itself. The first phenomenon is expressed in the economic enrichment or impoverishment of social groups as a whole; the second is expressed in a change in the economic profile of the group or in an increase or decrease in the height, so to speak, of steepness, of the economic pyramid. Accordingly, there are the following two types of fluctuations in the economic status of a society:

I. Fluctuation of the economic status of the group as a whole:

a) an increase in economic well-being;

b) a decrease in the latter.

II. Fluctuations in Height and Profile of Economic Stratification

within society:

a) the rise of the economic pyramid;

b) flattening of the economic pyramid.

We begin our study of fluctuations with the economic status of the group.

2. Fluctuations in the economic status of the group as a whole.

V I. The wealth and income of various societies varies greatly from one country to another, from one group to another. The following figures illustrate this statement. Taking the average level of wealth of Wisconsin in 1900 as 100 units, the corresponding indicators of the average level of wealth for Great Britain (for 1909) - 106; for France (for 1909) - 59; for Prussia (for 1908) - 42 ". In societies like Chinese, Indian, or even more primitive, the difference will be even more significant. The same can be said about the average per capita income2. Operating not with whole nations, but with less wide territorial groups ( province, regions, counties, various districts of the city, villages, including families living in the neighborhood), we will come to the same conclusion: the average level of their material well-being and income fluctuates.i, II.The average level of wealth and income in one and the same society is not constant, but changes over time.Whether it be a family or a corporation, the population of a district or an entire nation, the average level of wealth and income fluctuates up and down over time.There is hardly a family whose income and level of material well-being would remain unchanged for many years and during the lifetime of several generations Material "ups" and "downs", sometimes sharp and significant, sometimes small and gradual, are normal phenomena in the economic history of every family. The same can be said about larger social groups. As evidence, we present the following data3.

1 King W. I. The Wealth and Income of the People of the United States. N. Y., 1922. P. 96.

2 Ibid. P. 235ff.

Average national income per capita in the United States (in $)

Qualification year Per capita income Qualification year Per capita income

95116174147192236332332 340344330357 1449525595637

These figures, translated into the purchasing power of the dollar, would be slightly different, but would still show a similar fluctuation. Despite the general upward trend, the numbers show significant fluctuation from census to census, from year to year. Another example of fluctuation in the opposite direction is illustrated by the average annual income of the Russian population over the past few years1.

Per capita income in Russia (in gold rubles)

Years Income per capita Years Income per capita

19131916/17 101.3585.60 19211922/231924 38.6040.0047.30

In Great Britain, according to the calculations of A. Bowley, "the amount of average income in 1913 was almost one third more than in 1880; this increase was mainly achieved before the beginning of our century, and since that time it has been on a par with the depreciation money" 2. There is no need to add anything to this data. The income statistics of various European countries, without exception, show the same phenomena of fluctuations in the average annual level of income. The specific forms of manifestation of these fluctuations are different in different countries, but the phenomenon itself is common to all nations.

1 See: Prokopovich K. Essays on the economy of Soviet Russia. Berlin, 1923; Pervushin S. National and state economy of the USSR in 1922-1923. M., 1924. S. 10; Prokopovich K. National income of the USSR // Days. 1925. No. 6; Economic life. 1925. March 25.

2 Bowley A. L. The Change in the Distribution of the National Income. Oxford. 1920. P. 26.

III. In the history of a family, a nation or any other group, there is no o "sustainable trend either towards enrichment or impoverishment. All well-known trends are fixed only for a limited period of time. Over long periods they can work in the opposite direction. History does not provide sufficient evidence assert neither a trend towards a paradise of prosperity nor a hell of poverty.History shows only aimless fluctuations.

1 Methodological note. From the second half of the XIX century. under the influence of evolutionary theory, the social sciences pay considerable attention to the so-called "evolutionary tendencies", "historical regularities", "laws of historical development". Starting with Auguste Comte's "law of three stages" and Herbert Spencer's "formula of progress", many specialists - sociologists, anthropologists, historians and social philosophers - were immersed in the "search" for hundreds of "historical trends", "laws of progress and evolution". Unfortunately, all these regularities and tendencies befell the fate of kont's "laws" - they all turned into dust. Meanwhile, the "hunt" for the laws of historical development and "progress" turned into a shift in the interest of researchers towards the analysis of the phenomena of repetition, fluctuations, fluctuations and cycles of social life - phenomena to which the attention of thinkers of the past was riveted (Ecclesiastes, Confucius, Plato, Polybius, Florus , Seneca, Machiavelli, Vyako, etc.). Fortunately, it was this wave of research that resumed at the end of the 19th century. and is now gaining momentum. However, contrary to my desire to see in history the stages of progressive, progressive development, I inevitably fail, trying to somehow support such a theory with facts. Under these circumstances, I am compelled to content myself with a less glamorous, though perhaps more correct, conception of aimless historical fluctuations. Probably, in history there is a certain transcendental goal and invisible ways of moving towards it, but they have not yet been established by anyone. The concept of aimless fluctuations seems to be fair, including in the study of economic fluctuations in history. See more about this: Sorokin P. A. A Survey of the Cyclical Conceptions of Social and Historical Process // Social Forces. 1927 Vol. 5.

The essence of the problem lies in the following: whether there is a continuous cyclicity in fluctuations in the average level of well-being and income within the same society or not. Science does not have sufficient grounds for a definite answer to this question. All that can be done is to put forward a hypothesis, which may or may not be true. With this reservation in mind, let us consider a number of hypothetical statements.

Firstly, income statistics in the USA, Great Britain, Germany, France, Denmark, Russia and some other countries show that since the second half of the 19th century there has been a tendency towards an increase in the average level of income and well-being. Assuming the calculations are correct, the question is, is this trend a constant (or is it just part of a "parabola") that stagnation or even movement in the opposite direction can displace? The second possibility turns out to be more true. If we represent economic development in time schematically, then it will not be a straight line (A), nor a spiral (B), ascending or constantly descending. It is rather closer to the image (B), which does not have any constant direction (see diagram 1).

Here are some arguments in support of this hypothesis.

First of all, we note that the economic history of the family, or corporation, or any other economic organization shows that among such groups there was not a single one that would continuously grow economically. After a short or long period of time, during the lifetime of one or several generations, the upward trend was supplanted by its opposite. Many rich families, firms, corporations, cities, regions in antiquity and in the Middle Ages, and even in modern times, became poor and disappeared from the top of the financial pyramid. Among the existing magnates in Europe and America there are few, if any, except, perhaps, some of the royal families who were rich two or three centuries ago and have been rich continuously all this time. The vast majority, if not all, of the truly wealthy families have emerged in the last two centuries or even the last two decades. All the rich clans of the past have disappeared or become impoverished. This means that after a period of enrichment came a period of impoverishment. It seems that many financial corporations, firms and houses have had a similar fate. If this is the fate of these social groups, why should the fate of the nation as a whole be different?1

Secondly, the fate of many nations of the past shows that they repeat the fate of small social groups on a larger scale. However insufficient our knowledge of the economic history of Ancient Egypt, China, Babylon, Persia, Greece, Rome, Venice or other Italian republics of the Middle Ages, the fact remains that all these nations had many "ups"2 and "falls" in their history. economic prosperity, until finally some of them became impoverished altogether. Hasn't there been the same "ups" and "downs" in the history of modern powers? Were not they also typical of years of acute famine followed by relative prosperity, decades of economic prosperity superseded by decades of disaster, periods of accumulation of wealth followed by periods of waste?

1 According to the apt remark of V. Pareto, the difference is only in the duration of the cycle; it is huge for humanity, smaller but still significant for nations, extremely small and invisible to a family or a small social group. See: Pareto V. Traite... P. 1530 ff.

2 Turaev B. A. Ancient Egypt. Pg., 1922, p. 70; Breasted J. H. History of the Ancient Egyptians. Chicago. 1911. P. 155, 161, 174, 332; RostovzeffM. I. A Large Estate in Egypt. Madison, 1922; Petrie W. M. F. Revolution of Civilization. L., 1922.

3 *XIII-XIX dynasties - approximately from 1785 to 1200 BC. e.; Seti II - pharaoh of the XIX dynasty (XIII century BC); the period of the reign of the Ptolemies in Egypt - 305-31 years. BC e.

Similar periods of famine and impoverishment were observed in the history of ancient and medieval China, which continue to be repeated in our days. Similar fluctuations were in the history of ancient Greece and Rome. As an example of a major economic decline in many policies of Greece, we can cite the 7th century BC; further - the time of the end of the Peloponnesian War; and finally, in the III century BC - Athens became the richest policy after the Greco-Persian wars and the poorest after the defeat in Sicily2. Sparta became rich during its reign in the Balkans (end of the 5th century BC) and became poor after the Battle of Leuctra (371 BC). In the history of Rome, as an example of periods of decline, let us recall the 2nd-1st centuries BC and the 4th-5th centuries AD3. Similar "ups" and "downs" have occurred more than once in the history of the economic situation of the masses in England. France, Germany, Russia and many other countries. They are well enough known to speak about them in detail. But of particular importance is the fact that in many past societies, as indeed in those that exist today, the final or later stages of history were rather more modest economically than previous periods. If this is the case, then these are historical; the facts give no grounds for assuming a permanent trend in any direction.

Thirdly, the following calculations also testify against the hypothesis of a continuous increase in wealth over time. One centime, invested at a four percent profit in the time of Jesus Christ, would have brought in 1900 a huge capital, expressed in the amount of 2,308,500,000,000,000,000,000,000,000,000 francs. If we assume that the earth consists of pure gold, then it would take more than 30 "golden" planets in order to provide this huge amount of money. The real situation, as we know, is far from presented. In the time of Christ, huge capitals were concentrated in the hands of individuals, but they nevertheless would not have amounted to a sum of material values even remotely approaching the above. A sum of one hundred thousand francs, invested at a three percent profit in the time of Christ, would rise to 226 billion francs in the first five centuries, a fortune close to the national wealth of France at the present time. Since the actual amount of wealth is incomparably less than it would be according to these calculations, it follows that the level of their growth was much less than expected and that periods of accumulation of wealth were accompanied by periods of its waste and destruction.

Fourth, the cyclical hypothesis is supported by the fact of business cycles. The existence of "small business cycles" (periods of 3-5, 7-8, 10-12 years) is now beyond doubt.

Different points of view exist only about the duration of the cycle5. "The change that occurs is a succession of leaps or jerks, periods of rapid increase followed by

1 U-e M. R. I. The Economic History of China. N. Y., 1921. P. 40--121; Chen Huan Chang. The Economic Principles of Confucius. N.Y., 1911. Vol. 2. P. 507 ff.; Grousset R. Histoire dc TAsie. P., 1922. Vol. 2. P. 179ff., 249ff., 331ff.

2 See: Aristotle. Athenian polity. Ch. 28--29.

3 As for the history of Greece and Rome, refer to any fundamental research on ancient history and in particular to the works on the socio-economic history of K. Beloch, R. Poelman, D. Bury, P. Giro, T. Mommsen, M. I Rostovtsev and many other scientists cited in this book.

4 Pareto V. Traite... Vol. 2. P. 1528ff.

5 Aftalions. Les Crises periodiques de surproduction. P., 1913; Robertson. A Study of Industrial Fluctuation; Mitchell W. Business Cycles. N.Y.. 1913; Moore H. L. Economic Cycles. N. Y., 1914.

periods of stagnation or even decline "1. But was the progress of the second half of the 19th century as a whole part of a larger cycle? The theory of Professor N. Kondratiev answers this question in the affirmative. In addition to the small cycles mentioned above, he discovered the presence of larger cycles - lasting from 40 to 60 years.2 This is a direct confirmation of the hypothesis that the aforementioned progressive trend of the second half of the 19th century was only part of a long-term cycle. economic "ups" and "downs" is beyond doubt.The history of any country, taken over a fairly long period of time, shows this with a fair degree of certainty.

Sixthly, “the law of income reduction operates inexorably. The more people inhabit our earth, the less each person receives from nature to maintain his existence. After reaching a certain density, large masses of people come to greater poverty. Inventions and discoveries can delay, but cannot prevent the day of reckoning"5. It is true that the birth rate in European countries and in America has fallen, but not so much as to stop the growth of population in them; it is still quite high in the Slavic countries, not to mention the Asian mainland. It is also true that inventions are becoming more and more, but despite this. they do not yet guarantee a high standard of living for everyone in our world, even just in Europe. These reasons explain, in my opinion, why the hypothesis of a continuous increase in average income (or a continuous decrease) is implausible and why the hypothesis of small and large business cycles seems to me more correct. When we are told! that the standard of living of the average Parisian is almost as high as that of King Charles IV of France6, and when we see the dramatic and astonishing rise of modern production technology, it is indeed hard for us to admit that all this can hit the wall and fall apart. pieces. But nevertheless, the years of world war and especially the years of revolutions have shown how easily the wealth and even any tiny gains of civilization can be destroyed in a period of about a dozen years.

1 Pigou A. S. The Economics of Welfare. Cambridge, 1920. P. 799.

2 See: Kondratiev N. Large cycles of the conjuncture /, / Questions of the conjuncture. 1925. No. 1.

3 In recent years, the number of works confirming the presence of periodic cycles in various spheres of social life has been growing. O. Lorenz, J. Ferrari insist on cycles with a frequency of 100-125 years; K. Joel, V. Scherer set cycles at 300 years; others, like Millard, at 500 years; J. Brownlee - at 200 years old. However, along with periodic cycles, many researchers also record non-periodic long-term cycles covering many social processes (Pareto, Senzini, Spencer, Schmoller, Heizen, Ammon, Spengler, Ogburn and others). And if one can doubt the periodicity of long-term cycles, then the presence of long-term fluctuations is a fact of reality. See: Sorokin P. A Survey of the Cyclical Conceptions of Social and

Historical Process // Social Forces. 1927 Vol. 5.

4 Bowley A. L. The Division of the Product of Industry. Oxford, 1919. P. 58.

5 King W. I. The Wealth... P. 176.

6 D "Avenel. Le mechanisme de la vie moderne. P., 1908. P. 158-159.

On the other hand, it was our time that happened to discover many civilizations of the past. And the more we study them, the more erroneous is the notion that supposedly before the 19th century there was nothing but primitive culture and primitive economic organizations. Even civilizations whose age passed many millennia ago were brilliant in certain respects. Yet their brilliance faded, they ceased to prosper, and their riches disappeared. But this does not mean at all that since they were destroyed, the same fate awaits us, just as it does not give reason to think that the current European countries and America are some kind of exception to the rule.

We may be asked: how then to be with the development of progress in a spiral? But if progress is understood as a spiral of constant improvement in the economic situation, then such a hypothesis has not yet been proven by anyone. The only possible proof of this hypothesis is economic progress in some European countries, and even then only in the second half of the 19th century. But, according to the above considerations, this fact does not confirm this hypothesis. To this it should be added that the same trend was not observed at the same time among the majority of Asian, African and other peoples. Moreover, part of European prosperity has been achieved at the cost of exploiting the populations of backward and less developed countries. The aboriginal population of New Zealand in 1844 was 104,000; in 1858, 55,467; and by 1864 their number had dropped to 47,000. The same trend is observed in the demographic processes of Tahiti, Fiji and other parts of Oceania. And this is only a small fraction of the limitless number of such facts. What do they mean and why were they mentioned? Yes, because they convincingly show that, instead of improving, the level of economic and social well-being of these peoples worsened and led to their destruction, and that the economic prosperity in Europe in the 19th century was due in part to exploitation and colonial robbery. What was good for one group turned out to be devastating for another. To ignore all these groups - hundreds of millions of people in India, Mongolia, Africa, China, natives of all non-European countries and islands, at least those of them to whom progress in Europe has cost very dearly and who have hardly improved their standard of living over the last century - to ignore them and insist on "continuous progress in a spiral" only on the basis of some European countries is to be completely subjective, biased and a dreamer. Many of the primitive and civilized societies of the past, which ended their economic history in misery and poverty, emphatically do not allow us to speak of any law of progress "in a spiral or not in a spiral" for all societies2. At best, such progress has been a local and temporary phenomenon.

1 See: Arnoldi-Lavrov. Civilization and wild tribes. SPb., 1904. S. 141-M8; Triggs. The Decay of Aboriginal Races // Open Court. 1912. No. 10.

2 I think that a quote from the work "Byzantism and Slavism" by the outstanding Russian thinker K. Leontiev will confirm this idea: "There is nothing terrible or wrong to believe that Moses crossed the Sinai, that the Greeks built their acropolises, the Romans waged Punic wars, that the great Alexander The Macedonian crossed the Granik and won the battle of Gaugamela, that the apostles preached, the martyrs suffered, the poets sang their songs, the great artists painted their paintings, the knights fought in tournaments only so that the modern French, Prussian or Russian bourgeois in their ugly and comical attire could profit and enjoy living on the ruins of this former splendor! It would be a great disgrace to mankind if things turned out in this way.

1. The average level of wealth and income varies from group to group, from society to society.

2. The average level of wealth and income varies within a society or group over different periods of time. There is hardly any permanent trend in these fluctuations. All directions - down or up - can only be "directions" in a very relative sense (temporal and local).

3. If viewed from the point of view of a longer period, they are most likely part of a longer time cycle.

3. From this point of view, the following time cycles are distinguished: small business cycles and larger ones in the social sphere and in economic development.

4. The upward trend in average wealth and income in the second half of the 19th century in Europe and America is most likely part of such a major economic cycle.

5. The theory of endless economic progress is wrong.

Speaking about the economic status of a certain group, two main types of fluctuations should be distinguished. The first refers to the economic decline or rise of the group, and the second to the growth or contraction of economic stratification within the group itself. The first phenomenon is expressed in the economic enrichment or impoverishment of social groups as a whole; the second is expressed in a change in the economic profile of the group or in an increase or decrease in the height, so to speak, of steepness, of the economic pyramid. Accordingly, there are the following two types of fluctuations in the economic status of a society:

I. Fluctuation of the economic status of the group as a whole:

a) an increase in economic well-being;

b) a decrease in the latter.

II. Fluctuations in the height and profile of economic stratification within society:

a) the rise of the economic pyramid;

b) flattening of the economic pyramid.

We begin our study of fluctuations with the economic status of the group.

2. Fluctuations in the economic status of the group as a whole

I. The wealth and income of different societies varies greatly from one country to another, from one group to another. The following figures illustrate this statement. Taking the average level of wealth of Wisconsin in 1900 as 100 units, the corresponding indicators of the average level of wealth for Great Britain (for 1909) are 106; for France (for 1909) - 59; for Prussia (for 1908) - 42". In societies like Chinese, Indian, or, even more so, primitive, the difference will be even more significant. The same can be said about the average per capita income 2. Speaking not of whole nations, but of smaller territorial groups (province, regions, counties, various parts of the city, villages, including families living in the neighborhood), we will come to the same conclusion: the average level of their material well-being and income fluctuates.

II. The average level of wealth and income in the same society is not constant, but changes over time. Whether it's a family or a corporation, the population of a county or an entire nation, average wealth and income fluctuates up and down over time. There is hardly a family whose income and level of material well-being would remain unchanged for many years and during the life of several generations. Material "ups" and "downs," sometimes sharp and significant, sometimes small and gradual, are normal phenomena in the economic history of every family. The same can be said about larger social groups. As confirmation, we present the following data 3 .

US median national income per capita ($)

Qualification year		Qualification year

These figures, translated into the purchasing power of the dollar, would be slightly different, but would still show a similar fluctuation. Despite the general upward trend, the numbers show significant fluctuations from census to census, from year to year. Another example of a fluctuation in the opposite direction is illustrated by the average annual income of the Russian population over the past few years.

Per capita income in Russia

Qualification year		Qualification year

Great Britain, in accordance with the calculations of A. Bowley, "the amount of average income in 1913 was almost one third more than in 1880; this increase was mainly achieved before the beginning of our century, and since that time it has been on a par with the depreciation of money "2. There is no need to add anything to this data. The income statistics of various European countries, without exception, show the same phenomena of fluctuations in the average annual level of income. The specific forms of manifestation of these fluctuations are different in different countries, but the phenomenon itself is common to all nations.

First, income statistics in the US, UK, Germany. France, Denmark. Russia and some other countries shows that since the second half of the 19th century there has been a tendency to increase the average level of income and well-being. Assuming the calculations are correct,

Here are some arguments in support of this hypothesis. First of all, we note that the economic history of the family, or corporation, or any other economic organization shows that among such groups there was not a single one that would continuously grow economically. After a short or long period of time, during the lifetime of one or several generations, the upward trend was supplanted by its opposite. Many rich families, firms, corporations, cities, regions in antiquity and in the Middle Ages, and even in the New Age, became poor and disappeared from the top of the financial pyramid. Among the existing magnates in Europe and America, there are few, if any, except perhaps some of the royal families who were rich two or three centuries ago and have been getting rich continuously all this time.The vast majority, if not all, of the truly wealthy families have appeared in the last two centuries or even in the last two decades.All the rich clans of the past have disappeared or impoverished. This means that after a period of enrichment came a period of impoverishment. It seems that many financial corporations, firms and houses had a similar fate. If this is the fate of these social groups, why should the fate of the nation as a whole be different?"

Concerning the economic status of large masses of the population, dissimilar to each other, one can say this with a sufficient degree of certainty. It is known that the economic situation of the masses in ancient Egypt between the thirteenth and XIX dynasties and after Seti II, and even in the later Ptolemaic period 2 , deteriorated sharply in comparison with previous periods 3 *. Similar periods of famine and impoverishment were observed in the history of ancient and medieval China, which continue to be repeated even today. "Similar fluctuations were in the history of Ancient Greece and Rome. As an example of a major economic decline in many policies of Greece, we can cite the 7th century BC era; further - the time of the end of the Peloponnesian War; and finally, the III century BC - Athens became the richest policy after the Greco-Persian wars and the poorest after the defeat in Sicily 2. Sparta became rich during its reign in the Balkans (end of the V century BC BC) and became poor after the Battle of Leuctra (371 BC).In the history of Rome, as an example of periods of decline, we recall the 2nd-1st centuries BC and the 4th-5th centuries AD 3. "and "falls" occurred repeatedly in the history of the economic situation of the masses in England, France, Germany, Russia and in many other countries. They are well known enough to speak about them in detail. But it is especially important that in many past societies, as and, however, in the present, the final or later stages of history were rather more modest economically than the preceding periods. If this is the case, then these historical facts give no grounds for assuming a permanent trend in any direction.

Thirdly, the following calculations also testify against the hypothesis of a continuous increase in wealth over time. One centime, invested at a four percent profit in the time of Jesus Christ, would have brought in 1900 a huge capital, expressed in the amount of 2,308,500,000,000,000,000,000,000,000,000 francs. If we assume that the earth consists of pure gold, then it would take more than 30 "golden" planets in order to provide this huge amount of money. The real situation, as we know, is far from presented. In the time of Christ, huge capitals were concentrated in the hands of individuals, but they nevertheless would not have amounted to a sum of material values even remotely approaching the above. A sum of one hundred thousand francs, invested at a three percent profit in the time of Christ, would rise to 226 billion francs in the first five centuries, a fortune close to the national wealth of France at the present time. Since the actual amount of wealth is incomparably less than it would be according to these calculations, it follows that the level of their growth was much less than expected and that periods of accumulation of wealth were accompanied by periods of its waste and destruction 4 .

Fourth, the cyclical hypothesis is supported by the fact of business cycles. The existence of "small business cycles" (periods of 3-5, 7-8, 10-12 years) is now beyond doubt.

Different points of view exist only about the duration of the cycle 5 . "The change that occurs is a succession of leaps or jerks, periods of rapid growth followed by periods of stagnation or even decline."* But was there progress in the second half XIX century as a whole part of a larger cycle? The theory of Professor N. Kondratiev answers this question in the affirmative. In addition to the small cycles mentioned above, he discovered the presence of larger cycles - lasting from 40 to 60 years 2 . This is a direct confirmation of the hypothesis that the aforementioned progressive trend of the second half of the 19th century was only part of a long-term cycle. But why stop at such cyclicality rather than move on to even bigger economic changes? If their periodicity is difficult to prove 3, then the existence of long-term economic "ups" and "downs" does not raise any doubts. The history of any country, taken over a fairly long period of time, shows this with a sufficient degree of certainty.

Fifthly, the slowdown and halt in the growth of the average level of real income in England, France and Germany since about the beginning of the 20th century 4 , the obvious impoverishment of the population during and immediately after the World War are unconditional symptoms of at least a significant and temporary reversal movement. " Sixth, "the law of income reduction operates inexorably. The more people inhabit our earth, the less each person receives from nature to maintain his existence. After reaching a certain density, large masses of people come to greater poverty. Inventions and discoveries may delay, but cannot prevent the day of reckoning." 5 It is true that the birth rate in European countries and America has fallen, but not so much as to stop population growth in them; it is still quite high in the Slavic countries, not to mention about the Asian continent. It is also true that there are more and more inventions, but despite this, they still do not guarantee a high standard of living for everyone in our world, even just in Europe. These reasons explain, in my opinion, why the hypothesis of a continuous increase in average income (or a continuous decrease) is implausible and why the hypothesis of small and large business cycles seems to me more correct When we are told that the standard of living of the average Parisian is almost as high as that of King Charles IV of France 6 , and when we see the dramatic and astonishing rise of modern production technology, it is truly difficult for us to admit that all this can hit the wall and fall to pieces.Nevertheless, the years of the world war and especially the years of revolutions have shown how easy wealth and even any tiny gains of civilization can be destroyed in a period of about a dozen years.

We may be asked: how then to be with the development of progress in a spiral? But if progress is understood as a spiral of constant improvement in the economic situation, then such a hypothesis has not yet been proven by anyone. The only possible proof of this hypothesis is economic progress in some European countries, and even then only in the second half of the 19th century. But, according to the above considerations, this fact does not confirm this hypothesis. To this it should be added that the same trend was not observed at the same time among the majority of Asian, African and other peoples. Moreover, part of European prosperity has been achieved at the cost of exploiting the populations of backward and less developed countries. The aboriginal population of New Zealand in 1844 was 104,000; in 1858, 55,467; and by 1864 their number had dropped to 47,000. The same trend is observed in the demographic processes of Tahiti/"Fiji and other parts of Oceania". And this is only a small fraction of the limitless number of such facts. What do they mean and why were they mentioned? Yes, because they convincingly show that, instead of improving, the level of economic and social well-being of these peoples worsened and led to their destruction, and that the economic prosperity in Europe in the 19th century was due in part to exploitation and colonial robbery. What was good for one group turned out to be devastating for apyi oh. To ignore all these groups - hundreds of millions of people in India, Mongolia, Africa, China, natives of all non-European countries and islands, at least those of them to whom progress in Europe has cost very dearly and who have hardly improved their standard of living over the last century - to ignore them and insist on "continuous progress in a spiral" only on the basis of some European countries is to be completely subjective, biased and a dreamer. Many primitive and civilized societies of the past, which ended their economic history in misery and poverty, strongly do not allow us to speak of any law of progress "in a spiral or not in a spiral" for all societies 2 . At best, such progress has been a local and temporary phenomenon.

Summary

1. The average level of well-being and income varies from group to group, from society to society.

2. Average wealth and income varies within a society or group over time.

3. There is hardly any permanent trend in these fluctuations. All directions - down or up - - can only be "directions" in a very relative sense (temporal and local). If viewed from the point of view of a longer period, they are rather all part of a longer cycle of time.

4. From this point of view, the following time cycles are distinguished: small business cycles and larger ones in the social sphere and in economic development.

5. The upward trend in average wealth and income in the second half of the 19th century in Europe and America is most likely part of such a major economic cycle.

6. The theory of endless economic progress is wrong.

FLUCTUATIONS OF HEIGHT AND PROFILE OF ECONOMIC STRATIFICATION

Having discussed the changes in the economic status of society as a whole, let us now turn to changes in the height and profile of economic gratification. The main questions to be discussed are: first, are the height and profile of the economic pyramid of society constant, or do they change from group to group and within the same group over time? Secondly, if they change, is there any regularity and periodicity in this change? Thirdly, does the being have a constant direction of these changes, and if so, what is it like?