XII. THE NATURE OF LONG WAVES
Is it possible to maintain that the existence of long cycles in the dynamics of the capitalist economy is proved on the basis of the preceding statements? The relevant data which we were able to quote cover about 140 years. This period comprises two and one-half cycles only. Although the period embraced by the data is sufficient to decide the question of the existence of long waves, it is not enough to enable us to assert beyond doubt the cyclical character of those waves. Nevertheless we believe that the available data are sufficient to declare this cyclical character to be very probable.
We are led to this conclusion not only by the consideration of the factual material, but also because the objections to the assumption of long cyclical waves are very weak.
It has been objected that long waves lack the regularity which business cycles display. But this is wrong. If one defines “regularity” as repetition in regular time-intervals, then long waves possess this characteristic as much as the intermediate ones. A strict periodicity in social and economic phenomena does not exist at all — neither in the long nor in the intermediate waves. The length of the latter fluctuates at least between 7 and 11 years, i.e., 57 per cent. The length of the long cycles fluctuates between 48 and 60 years, i.e., 25 per cent only.
If regularity is understood to be the similarity and simultaneity of the fluctuations of different series, then it is present to the same degree in the long as in the intermediate waves.
If, finally, regularity is understood to consist in the fact that the intermediate waves are an international phenomenon, then the long waves do not differ from the latter in this respect either.
Consequently, there is no less regularity in the long waves than in the intermediate ones, and if we want to designate the latter as cyclical, we are bound not to deny this characterization to the former.
It has been pointed out [by other critics] that the long waves — as distinct from the intermediate ones which come from causes within the capitalistic system — are conditioned by casual, extra-economic circumstances and events, such as (1) changes in technique, (2) wars and revolutions, (3) the assimilation of new countries into the world economy, and (4) fluctuations in gold production.
These considerations are important. But they, too, are not valid. Their weakness lies in the fact that they reverse the causal connections and take the consequence to be the cause, or see an accident where we have really to deal with a law governing the events. In the preceding paragraphs, we have deliberately, though briefly, considered the establishment of some empirical rules for the movement of long waves. These regularities help us now to evaluate correctly the objections just mentioned.
1. Changes in technique have without doubt a very potent influence on the course of capitalistic development. But nobody has proved them to be the cause of long waves. On the contrary, the great importance of technical inventions and of the investment of new capital is most clearly evident during the upswing of the long cycle and during the first years after its highest point. During the downswing, on the other hand, the number of important inventions and new installations put into operation decreases noticeably. This is perfectly natural, for during the downswing the conditions for new investments are relatively unfavourable. Consequently, changes in technique cannot be considered as primary causes of the long waves; they are themselves only a function of their course.
2. Wars and revolutions also influence the course of economic development very strongly. But wars and revolutions do not come out of a clear sky, and they are not caused by arbitrary acts of individual personalities. They originate from real, especially economic, circumstances. The assumption that wars and revolutions acting from the outside cause long waves evokes the question as to why they themselves follow each other with regularity and solely during the upswing of long waves. Much more probable is the assumption that wars originate in the acceleration of the pace and the increased tension of economic life, in the heightened economic struggle for markets and raw materials, and that social shocks happen most easily under the pressure of new economic forces.
Wars and revolutions, therefore, can also be fitted into the rhythm of the long waves and do not prove to be the forces from which these movements originate, but rather to be one of their symptoms. But once they have occurred, they naturally exercise a potent influence on the pace and direction of economic dynamics.
3. As regards the opening-up of new countries for the world economy, it seems to be quite obvious that this cannot be considered an outside factor which will satisfactorily explain the origin of long waves. The United States have been known for a relatively very long time; for some reason or other they begin to be entangled in the world economy on a major scale only from the middle of the nineteenth century. Likewise, the Argentine and Canada, Australia and New Zealand, were discovered long before the end of the nineteenth century, although they begin to be entwined in the world economy to a significant extent only with the coming of the 1890’s. It is perfectly clear historically that, in the capitalistic economic system, new regions are opened for commerce during those periods in which the desire of old countries for new markets and new sources of raw materials becomes more urgent than theretofore. It is equally apparent that the limits of this expansion of the world economy are determined by the degree of this urgency. If this be true, then the opening of new countries does not provoke the upswing of a long wave. On the contrary, a new upswing makes the exploitation of new countries, new markets, and new sources of raw materials necessary and possible, in that it accelerates the pace of capitalistic economic development.
4. There remains the question whether the discovery of new gold mines, the increase in gold production, and a consequent increase in the gold stock can be regarded as a casual, outside factor causing the long waves.
An increase in gold production leads ultimately to a rise in prices and to a quickening in the tempo of economic life. But this does not mean that the changes in gold production are of a casual, outside character and that the waves in prices and in economic life are likewise caused by chance. We consider this to be not only unproved but positively wrong. This contention originates from the belief, first, that the discovery of gold mines and the perfection of the technique of gold production are accidental and, secondly, that every discovery of new gold mines and of technical inventions in the sphere of gold production brings about an increase in the latter. However great may be the creative element in these technical inventions and the significance of chance in these discoveries, yet they are not entirely accidental. Still less accidental — and this is the main point — are the fluctuations in gold production itself. These fluctuations are by no means simply a function of the activity of inventors and of the discoveries of new gold mines. On the contrary, the intensity of inventors’ and explorers’ activity and the application of technical improvement in the sphere of gold production, as well as the resulting increase of the latter, depend upon other, more general causes. The dependence of gold production upon technical inventions and discoveries of new gold mines is only secondary and derived.
Although gold is a generally recognized embodiment of value and, therefore, is generally desired, it is only a commodity. And like every commodity it has a cost of production. But if this be true, then gold production — even in newly discovered mines — can increase significantly only if it becomes more profitable, i.e., if the relation of the value of the gold itself to its cost of production (and this is ultimately the prices of other commodities) becomes more favorable. If this relation is unfavorable, even gold mines the richness of which is by no means yet exhausted may be shut down; if it is favorable, on the other hand, even relatively poor mines will be exploited.
When is the relation of the value of gold to that of other commodities most favorable for gold production? We know that commodity prices reach their lowest level toward the end of a long wave. This means that at this time gold has its highest purchasing power, and gold production becomes most favorable. This can be illustrated by the figures in Table 2.
At the same time, we believe ourselves justified in saying that the long waves, if existent at all, are a very important and essential factor in economic development, a factor the effects of which can be found in all the principal fields of social and economic life.
Even granting the existence of long waves, one is, of course, not justified in believing that economic dynamics consists only in fluctuations around a certain level. The course of economic activity represents beyond doubt a process of development, but this development obviously proceeds not only through intermediate waves but also through long ones. The problem of economic development in toto cannot be discussed here.
In asserting the existence of long waves and in denying that they arise out of random causes, we are also of the opinion that the long waves arise out of causes which are inherent in the essence of the capitalistic economy. This naturally leads to the question as to the nature of these causes. We are fully aware of the difficulty and great importance of this question; but in the preceding sketch we had no intention of laying the foundations for an appropriate theory of long waves.¹Gold production, as can be seen from these figures, becomes more profitable as we approach a low point in the price level and a high point in the purchasing power of gold (1895 and the following years).
It is clear, furthermore, that the stimulus to increased gold production necessarily becomes stronger the further a long wave declines. We, therefore, can suppose theoretically that gold production must in general increase most markedly when the wave falls most sharply, and vice versa.
In reality, however, the connection is not as simple as this but becomes more complicated, mainly just because of the effect of the changes in the technique of gold production and the discovery of new mines. It seems to us, indeed, that even improvements in technique and new gold discoveries obey the same fundamental law as does gold production itself, with more or less regularity in timing. Improvements in the technique of gold production and the discovery of new gold mines actually do bring about a lowering in the cost of production of gold; they influence the relation of these costs to the value of gold, and consequently the extent of gold production. But then it is obvious that exactly at the time when the relation of the value of gold to its cost becomes more unfavorable than theretofore, the need for technical improvements in gold mining and for the discovery of new mines necessarily becomes more urgent and this stimulates research in this field. There is, of course, a time-lag, until this urgent necessity, though already recognized, leads to positive success. In reality, therefore, gold discoveries and technical improvements in gold mining will reach their peak only when the long wave has already passed its peak, i.e., perhaps in the middle of the downswing. The available facts confirm this supposition.¹ In the period after the 1870’s, the following gold discoveries were made: 1881 in Alaska, 1884 in the Transvaal, 1887 in West Australia, 1890 in Colorado, 1894 in Mexico, 1896 in the Klondike. The inventions in the field of gold-mining technique, and especially the most important ones of this period (the inventions for the treatment of ore), were also made during the 1880’s, as is well known.
Gold discoveries and technical improvements, if they occur, will naturally influence gold production. They can have the effect that the increase in gold production takes place somewhat earlier than at the end of the downswing of the long wave. They also can assist the expansion of gold production, once that limit is reached. This is precisely what happens in reality. Especially after the decline in the 1870’s, a persistent, though admittedly slender, increase in gold production begins about the year 1883,² whereas, in spite of the disturbing influences of discoveries and inventions, the upswing really begins only after gold has reached its greatest purchasing power; and the increased production is due not only to the newly discovered gold fields but in a considerable degree also to the old ones. This is illustrated by the figures in Table 3.
From the foregoing one may conclude, it seems to us, that gold production, even though its increase can be a condition for an advance in commodity prices and for a general upswing in economic activity, is yet subordinate to the rhythm of the long waves and consequently cannot be regarded as a causal and random factor that brings about these movements from the outside.
XIII. CONCLUSIONS
The objections to the regular cyclical character of the long waves, therefore, seem to us to be unconvincing. In view of this circumstance and considering also the positive reasons developed above, we think that, on the basis of the available data, the existence of long waves of cyclical character is very probable.
At the same time, we believe ourselves justified in saying that the long waves, if existent at all, are a very important and essential factor in economic development, a factor the effects of which can be found in all the principal fields of social and economic life.
Even granting the existence of long waves, one is, of course, not justified in believing that economic dynamics consists only in fluctuations around a certain level. The course of economic activity represents beyond doubt a process of development, but this development obviously proceeds not only through intermediate waves but also through long ones. The problem of economic development in toto cannot be discussed here.
In asserting the existence of long waves and in denying that they arise out of random causes, we are also of the opinion that the long waves arise out of causes which are inherent in the essence of the capitalistic economy. This naturally leads to the question as to the nature of these causes. We are fully aware of the difficulty and great importance of this question; but in the preceding sketch we had no intention of laying the foundations for an appropriate theory of long waves.
_The+Long+Waves+in+Economic+Life+%5B4+p.%5D_Page_1.png)
_The+Long+Waves+in+Economic+Life+%5B4+p.%5D_Page_2.png)
_The+Long+Waves+in+Economic+Life+%5B4+p.%5D_Page_3.png)
_The+Long+Waves+in+Economic+Life+%5B4+p.%5D_Page_4.png)
%20from%201250%20to%202025.png "Commodity Price Index (yearly bars) from 1250 to 2025: 324-Year Enoch Waves, 162-Year Hegemony Waves, 54-Year Kondratieff Waves, 18-Year Kuznets Waves.")
%20from%201750%20to%202025.png "Commodity Price Index (quarterly bars) from 1750 to 2025: 972-Year Methuselah Wave, 162-Year Hegemony Waves, 54-Year Kondratieff Waves, 18-Year Kuznets Waves, 9-Year Juglar Waves.")
%20from%201900%20to%202025.png "Commodity Price Index (monthly bars) from 1900 to 2025: 54-Year Kondratieff Waves, 18-Year Kuznets Waves, 9-Year Juglar Waves.")
%20from%201995%20to%202025.png "Commodity Price Index (weekly candles) from 1995 to 2025: 18-Year Kuznets Waves, 9-Year Juglar Waves, 54-Month Kitchin Cycles, 18-Month Cycles, 40-Week Cycles.")
![» The principle of confirmation [20-week VTL] on display. « Dow Jones, S&P 500, and NASDAQ 100 (daily bars) from July 2024 to October 2025. 18-Month Cycles, 40-Week Cycles, 20-Week Cycles, 80-Day Cycles, 40-Day Cycles, 20-Day Cycles.](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhS3s2ImfzAiWEArbq7x3WDZ99EDywSD09ni3n0jYgCY5iGkA7hTFvQumfvydU7QlOYilpWNg402S-H8hinJHXE9nutuApcq4mK-P4lsnDAb_mjvn1vgZkkgWBkMYGFU-RFMVTKCewhQN63cS1N3gSGaGN7WiUl-MYgRVun7ssSKmBOpLk9pI4dyPnXww5G/s2560/G3HcQ84XAAAzKvl.jpg "» The principle of confirmation [20-week VTL] on display. « Dow Jones, S&P 500, and NASDAQ 100 (daily bars) from July 2024 to October 2025. 18-Month Cycles, 40-Week Cycles, 20-Week Cycles, 80-Day Cycles, 40-Day Cycles, 20-Day Cycles.")
