Fluctuations in economic activity (economic conditions), consisting of repeated contraction (economic downturn, recession, depression) and expansion of the economy (economic recovery). Cycles are periodic, but usually irregular. Usually (within the framework of neoclassical synthesis) they are interpreted as fluctuations around the long-term trend of economic development.

Deterministic view of causes economic cycles comes from predictable, well-defined factors that are formed at the stage of rise (factors of decline) and decline (factors of rise). The stochastic point of view proceeds from the fact that cycles are generated by factors of a random nature and represent the reaction of the economic system to internal and external impulses.

Usually isolated four main types economic cycles:

Kitchin short-term cycles(characteristic period - 2-3 years);
medium-term Juglar cycles(characteristic period - 6-13 years);
Kuznets rhythms (characteristic period - 15-20 years);
Kondratieff long waves(characteristic period - 50-60 years).

Phases

Business cycles have four relatively clearly distinguishable phases: peak, decline, bottom (or “nadir”) and recovery; but in the nai to a greater extent These phases are characteristic of Juglar cycles.

Business cycles in the economy

Climb

The rise (revival) occurs after reaching the lowest point of the cycle (bottom). Characterized by a gradual increase in employment and production. Many economists believe that this stage is characterized by low inflation rates. Innovations are being introduced in the economy with short term payback. The demand deferred during the previous recession is being realized.

Peak

The peak, or top of the business cycle, is the “high point” of an economic expansion. In this phase, unemployment usually reaches its lowest level or disappears completely, production capacities operate at or near maximum load, that is, almost all the material and labor resources available in the country are used in production. Typically, although not always, inflation increases during peaks. The gradual saturation of markets increases competition, which reduces profit margins and increases the average payback period. The need for long-term lending is increasing with a gradual decrease in the ability to repay loans.

Recession

A recession (recession) is characterized by a reduction in production volumes and a decline in business and investment activity. As a result, unemployment increases. Officially, a decline in business activity that lasts more than three months in a row is considered a phase of economic decline, or recession.

Bottom

The bottom (depression) of the economic cycle is the “low point” of production and employment. It is believed that this phase of the cycle usually does not last long. However, history also knows exceptions to this rule. The Great Depression of the 1930s, despite periodic fluctuations in business activity, lasted 10 years (1929-1939).

A characteristic feature of cyclical development is that it is, first of all, development, and not fluctuations around a certain constant (potential) value. Cyclicality means development in a spiral, not in a vicious circle. This mechanism of progressive movement in its various forms. The economic literature emphasizes that cyclical fluctuations occur around the trajectory long-term growth(secular trend).

Causes

The theory of real business cycles explains recessions and recoveries by the influence of real factors. IN industrial countries This could be the emergence of new technologies, changes in prices for raw materials. In agricultural countries - harvest or failure. Also, force majeure situations (war, revolution, natural disasters) can become an impetus for change. Anticipating a change in the economic situation for better or worse, households and firms en masse begin to save or spend more. As a result, aggregate demand decreases or increases, retail trade turnover decreases or increases. Firms receive fewer or more orders for the manufacture of products, and production volume and employment change accordingly. Business activity is changing: firms begin to reduce the range of products they produce or, on the contrary, launch new projects and take out loans for their implementation. That is, the entire economy fluctuates, trying to reach equilibrium.

In addition to fluctuations in aggregate demand, there are other factors that influence the phases of the economic cycle: changes depending on the changing seasons in agriculture, construction, the automotive industry, seasonality of retail trade, secular trends in the economic development of the country, depending on the resource base, size and structure of the population , proper management.

Impact on the economy

The existence of the economy, as a set of resources for steadily growing consumption, has an oscillatory nature. Fluctuations in the economy are expressed in the business cycle. The “delicate” moment of the economic cycle is considered to be a recession, which, at some scale, can turn into a crisis.

The concentration (monopolization) of capital leads to “wrong” decisions on the scale of the economy of a country or even the world. Any investor strives to receive income from his capital. The investor's expectations for the amount of this income come from the rise-peak stage, when income is maximum. At the stage of recession, the investor considers it unprofitable for himself to invest capital in projects with a profitability lower than “yesterday’s”.

Without such investments, production activity is reduced, and as a consequence, the solvency of workers in this sphere, who are consumers of goods and services in other spheres. Thus, the crisis of one or more industries affects the entire economy as a whole.

Another problem of capital concentration is the withdrawal of the money supply (money) from the sphere of consumption and production of consumer goods (also the sphere of production of the means of production of these goods). Money received in the form of dividends (or profits) accumulates in investors' accounts. There is a lack of money to maintain the required level of production, and as a consequence, a decrease in the volume of this production. The unemployment rate is growing, the population is saving on consumption, and demand is falling.

Of the economic sectors, the service sector and non-durable goods industries are somewhat less affected by the devastating effects of an economic downturn. The recession is even helping to intensify some types of activity, in particular increasing the demand for the services of pawnshops and lawyers specializing in bankruptcy. Firms producing capital goods and durable consumer goods are most sensitive to cyclical fluctuations.

Not only are these firms the hardest hit by a business downturn, but they also benefit the most from an economic recovery. There are two main reasons:

• the ability to postpone purchases;
• market monopolization.

The purchase of capital equipment can most often be postponed to the future; During difficult economic times, manufacturers tend to refrain from purchasing new machinery and equipment and constructing new buildings. During a prolonged downturn, firms often choose to repair or upgrade outdated equipment rather than spend heavily on new equipment.

As a result, investment in capital goods declines sharply during economic downturns. The same applies to durable consumer goods. Unlike food and clothing, the purchase of a luxury car or expensive household appliances can be postponed until better times. During economic downturns, people are more likely to repair rather than replace durable goods. While sales of food and clothing also tend to decline, the decline is typically smaller compared to the decline in demand for durable goods.

Monopoly power in most capital goods and durable consumer goods industries stems from the fact that the markets for these goods are typically dominated by a few large firms. Their monopoly position allows them to keep prices the same during economic downturns, reducing production in response to falling demand. Consequently, falling demand has a much greater impact on production and employment than on prices. A different situation is typical for industries producing short-term consumer goods. These industries usually respond to falling demand by lowering prices overall, since no one firm has significant monopoly power.

History and long cycles

Business cycles are not truly "cyclical" in the sense that the length of the period from, say, one peak to another has fluctuated significantly throughout history. Although economic cycles in the United States lasted on average about five years, cycles lasting from one to twelve years were known. The most pronounced peaks (measured as percentage increases above economic growth trend) coincided with the major wars of the 20th century, and the deepest economic recession, excluding the Great Depression, was observed after the end of the First World War.

At the end of the 20th century, the American economy appeared to have entered a period of prolonged recession, as evidenced by several economic indicators, in particular the level of real wages and the volume of net investment. However, even with a long-term downward trend in growth, the US economy continues to grow; Although the country recorded negative GDP growth in the early 1980s, it remained positive in all subsequent years except 1991.

Symptomatic of the secular decline that began in the 1960s, although growth rates have rarely been negative, the level of economic activity in the United States has virtually never exceeded trend growth since 1979.

It should be noted that along with the described economic cycles, the theory also distinguishes long cycles. Long cycles in the economy are economic cycles lasting more than 10 years. Sometimes called by the names of their researchers.

Investment cycles(7-11 years old) studied by Clement Juglar. These cycles, apparently, make sense to consider as medium-term, rather than long-term.

Infrastructure investment cycles (15-25 years old) was studied by Nobel laureate Simon Kuznets.

Kondratieff cycles(45-60 years old) was described by Russian economist Nikolai Kondratiev.

It is these cycles that are most often referred to as “long waves” in economics.

Kitchin cycles

Kitchin cycles- short-term economic cycles with a characteristic period of 3-4 years, discovered in the 1920s by the English economist Joseph Kitchin. Kitchin himself explained the existence of short-term cycles by fluctuations in world gold reserves, but in our time such an explanation cannot be considered satisfactory. In modern economic theory, the mechanism for generating these cycles is usually associated with time delays (time lags) in the flow of information that influence decision-making by commercial firms.

Firms react to improving market conditions by fully utilizing their capacity, the market is flooded with goods, after some time excessive stocks of goods are formed in warehouses, after which a decision is made to reduce capacity utilization, but with a certain delay, since information about the excess of supply over demand itself is usually received with a certain delay, in addition, it takes time to verify this information; It also takes some time to make and approve the decision itself.

In addition, there is a certain lag between the decision-making and the actual reduction in capacity utilization (it also takes time to implement the decision). Finally, another time lag exists between the moment the load level begins to decline production capacity and the current resorption of excess stocks of goods in warehouses. In contrast to the Kitchin cycles, within the Juglar cycles we observe fluctuations not just in the level of utilization of existing production facilities (and, accordingly, in the volume of inventory), but also fluctuations in the volume of investment in fixed capital.

Juglar cycles

Juglar cycles- medium-term economic cycles with a characteristic period of 7-11 years. They are named after the French economist Clément Juglar, who was one of the first to describe these cycles. In contrast to the Kitchin cycles, within the framework of the Juglar cycles we observe fluctuations not just in the level of utilization of existing production facilities (and, accordingly, in the volume of inventory), but also fluctuations in the volume of investment in fixed capital. As a result, in addition to the time delays characteristic of Kitchin cycles, there are also time delays between the adoption of investment decisions and the construction of the corresponding production facilities (as well as between the construction and the actual launch of the corresponding capacities).

An additional delay is formed between the decline in demand and the liquidation of the corresponding production capacity. These circumstances determine that the characteristic period of Juglar’s ​​cycles turns out to be noticeably longer than the characteristic period of Kitchin’s cycles. Cyclical economic crises/recessions can be considered as one of the phases of the Juglar cycle (along with the phases of recovery, recovery and depression). At the same time, the depth of these crises depends on the phase of the Kondratieff wave.

Since no clear periodicity is observed, an average value of 7-10 years was taken.

Phases of the Juglar cycle

In the Juglar cycle, four phases are often distinguished, in which some researchers distinguish subphases:

• revival phase (start and acceleration subphases);
• phase of recovery, or prosperity (subphases of growth and overheating, or boom);
• recession phase (subphases of collapse/acute crisis and recession);
• phase of depression, or stagnation (subphases of stabilization and shift).

Rhythms of the Blacksmith

Blacksmith cycles (rhythms) last approximately 15-25 years. They were called Kuznets cycles after the American economist of the future laureate Nobel Prize Simon Kuznets. They were opened by him in 1930. Kuznets associated these waves with demographic processes, in particular the influx of immigrants and building changes, so he called them “demographic” or “building” cycles.

Currently, a number of authors consider Kuznets’ rhythms as technological and infrastructural cycles. As part of these cycles, there is a massive update of core technologies. In addition, large cycles of real estate prices coincide well with the Kuznets cycle using the example of Japan from 1980-2000. and the duration of the large half-wave of rising prices in the United States.

There was also a proposal to consider Kuznets rhythms as the third harmonic of the Kondratieff wave. There is no clear periodicity, so researchers take an average of 15-20 years.

Kondratieff cycles

Kondratiev cycles (K-cycles or K-waves) are periodic cycles of the modern world economy lasting 40-60 years.

There is a certain connection between long-term Kondratieff cycles and medium-term Juglar cycles. Such a connection was noticed by Kondratiev himself. Currently, there is an opinion that the relative correctness of the alternation of upward and downward phases of Kondratieff waves (each phase is 20-30 years) is determined by the nature of the group of nearby medium-term cycles. During the upward phase of the Kondratieff Wave, the rapid expansion of the economy inevitably leads society to the need for change. But the possibilities for changing society lag behind the demands of the economy, so development moves into a downward B-phase, during which crisis-depressive phenomena and difficulties force a restructuring of economic and other relations.

The theory was developed by Russian economist Nikolai Kondratiev (1892-1938). In the 1920s he drew attention to the fact that in the long-term dynamics of some economic indicators There is a certain cyclical regularity, during which phases of growth of the corresponding indicators are replaced by phases of their relative decline with a characteristic period of these long-term fluctuations of about 50 years. Such fluctuations were designated by him as large or long cycles, later called Kondratieff cycles by J. Schumpeter in honor of the Russian scientist. Many researchers also began to call them long waves, or Kondratieff waves, sometimes K-waves.

The characteristic wave period is 50 years with a possible deviation of 10 years (from 40 to 60 years). Cycles consist of alternating phases of relatively high and relatively low rates of economic growth. Many economists do not recognize the existence of such waves.

N. D. Kondratyev noted four empirical patterns in the development of large cycles:

Before the start of the upward wave of each major cycle, and sometimes at the very beginning of it, significant changes are observed in the conditions of the economic life of society.
Changes are expressed in technical inventions and discoveries, in changing conditions money circulation, in strengthening the role of new countries in world economic life, etc. These changes to one degree or another occur constantly, but, according to N.D. Kondratiev, they occur unevenly and are most intensely expressed before the start of upward waves of large cycles and in their beginning.

Periods of upward waves of large cycles, as a rule, are much richer in major social upheavals and upheavals in the life of society (revolutions, wars) than periods of downward waves.
In order to be convinced of this statement, it is enough to look at the chronology of armed conflicts and coups in world history.

The downward waves of these large cycles are accompanied by long-term agricultural depression.

Large cycles of economic conditions are identified in the same unified process of economic development dynamics, in which medium cycles with their phases of recovery, crisis and depression are also identified.

Kondratieff's research and conclusions were based on empirical analysis of a large number of economic indicators of various countries over fairly long periods of time, covering 100-150 years. These indicators are: price indices, government debt securities, nominal wages, foreign trade turnover indicators, coal mining, gold production, lead production, cast iron, etc.

Kondratiev’s opponent, D.I. Oparin, pointed out that the time series of the studied economic indicators, although they give larger or smaller deviations from the average in one direction or another during different periods of economic life, but the nature of these deviations as a separate indicator, and the correlation of indicators does not allow us to distinguish a strict cyclicity. Other opponents pointed out N. D. Kondratiev’s deviations from Marxism, in particular his use of the “quantitative theory of money” to explain cycles.

Over the past 80 years, Nikolai Kondratiev’s theory of Long Waves has been enriched by the theories of creative destruction by I. Schumpeter, the theory of technical and economic cenoses by L. Badalyan and V. Krivorotov, the theory of technological structures developed by academicians S. Glazyev and Lvov, the theory of evolutionary cycles by Vladimir Pantin.

The theory of long waves, as well as Nikolai Kondratiev himself, was rehabilitated by the famous Soviet economist S.M. Menshikov in his work “Long waves in economics. When society changes its skin" (1989).

Dating of Kondratieff waves

For the period after the industrial revolution, the following Kondratieff cycles/waves are usually distinguished:

• 1 cycle - from 1803 to 1841-43. (moments of minimum economic indicators of the world economy are noted)
• 2 cycle - from 1844-51 to 1890-96.
• 3 cycle - from 1891-96 to 1945-47.
• 4th cycle - from 1945-47 to 1981-83.
• 5 cycle - from 1981-83 to ~2018 (forecast)
• 6 cycle - from ~2018 to ~2060 (forecast)

However, there are differences in the dating of the “post-Kondratieff” cycles. Analyzing a number of sources, Grinin L. E. and Korotaev A. V. give the following boundaries of the beginning and end of the “post-Kondratieff” waves:

• 3 cycle: 1890-1896 - 1939-1950
• 4 cycle: 1939-1950 - 1984-1991
• 5 cycle: 1984-1991 - ?

The relationship between Kondratieff waves and technological structures

Many researchers associate the change of waves with technological structures. Breakthrough technologies open up opportunities for expanding production and form new sectors of the economy, forming a new technological structure. In addition, Kondratieff waves are one of the most important forms of implementation of industrial production principles.

The consolidated system of Kondratieff waves and their corresponding technological structures is as follows:

• 1st cycle - textile factories, industrial use of coal.
• 2nd cycle - coal mining and ferrous metallurgy, railway construction, steam engine.
• 3rd cycle - heavy engineering, electric power, inorganic chemistry, production of steel and electric motors.
• 4th cycle - production of cars and other machines, chemical industry, oil refining and internal combustion engines, mass production.
• 5th cycle - development of electronics, robotics, computing, laser and telecommunications technology.
• 6th cycle - perhaps NBIC-convergence en (convergence of nano-, bio-, information and cognitive technologies).

After the 2030s (2050s according to other sources), the onset of a technological singularity is possible, which cannot be controlled. this moment analysis and forecast. If this hypothesis is correct, then Kondratiev cycles may end closer to 2030.

Limitations of the Kondratiev Model

Kondratieff waves have not yet received final recognition in world science. Some scientists build calculations, models, and forecasts based on K-waves (all over the world and especially in Russia), and a significant part of economists, including the most famous ones, doubt their existence or even deny them.

It should be noted that, despite the importance of the cyclical development of society revealed by N. D. Kondratiev for forecasting problems, his model (like any stochastic model) only studies the behavior of the system in a fixed (closed) environment. Such models do not always answer questions related to the nature of the system itself, the behavior of which is being studied. It is well known that the behavior of a system is an important aspect in its study.

However, no less important, and perhaps even the most important, are aspects of the system associated with its genesis, structural (gestalt) aspects, aspects of the complementarity of the logic of the system with its subject, etc. They allow us to correctly pose the question of the reasons for this or that type of behavior system depending, for example, on the external environment in which it operates.

Kondratiev cycles in this sense are just a consequence (result) of the system’s reaction to the current external environment. The question of revealing the nature of the process of such a reaction today and revealing the factors that influence the behavior of systems is relevant. Especially when many, based on the results of N.D. Kondratiev, A.V. Korotaev and S.P. Kapitsa on the compression of time, predict a more or less rapid transition of society to a period of permanent crisis.

Business cycle concept

In reality, the economy does not develop according to the trend that characterizes economic growth, but cyclically - through constant deviations from the trend, through recessions and ascents (Fig. 4.2).

Economic (or business) cycle (business cycle) represents periodic downturns and upswings in the economy, fluctuations in business activity. These fluctuations irregular and difficult to predict, Therefore, the term “cycle” is rather arbitrary.

There are two extreme points of the cycle (Fig. 4.2, a): point peak(react), corresponding to the maximum of business activity; point bottom(trough), which corresponds to the minimum business activity (maximum recession).

Rice. 4.2. Economic cycle and its phases

Business cycle phases

The cycle is usually divided into two phases:

decline phase or recession(recession), which lasts from peak to bottom. A particularly long and deep recession is called depression(depression). It is no coincidence that the crisis of 1929-1933 called the Great Depression;

lifting phase or revival(recovery), which continues from bottom to peak.

There is another approach in which four phases are distinguished in the economic cycle (Fig. 4.2, b), but extreme points are not identified, since it is assumed that when the economy reaches a maximum or minimum of business activity, then a certain period of time (sometimes quite long) it is in this state:

Phase I - boom(boom), at which the economy reaches maximum activity. This is the period overemployment(the economy is above potential output, above trend) and inflation.(Recall that when an economy's actual GDP is higher than potential GDP, this corresponds to an inflationary gap.) An economy in this state is called "overheated"(overheated economy);

II phase - recession(recession or slump) - business activity begins to decline, actual GDP reaches its potential level and continues to fall below the trend, which leads the economy to the next phase - crisis;

III phase - a crisis(crisis), or stagnation, the economy is in a state of recession gap, since actual GDP is less than potential. This is a period of underutilization of economic resources, i.e. high unemployment;

IV phase - revival, or recovery, the economy gradually begins to emerge from the crisis, actual GDP approaches and then exceeds its potential level until it reaches its maximum, which again leads to a boom phase.

Causes of economic cycles

In economic theory, a variety of phenomena were declared to be the causes of economic cycles: the level of solar activity; wars and revolutions; insufficient level of consumption; high population growth rates; investor optimism and pessimism; change in money supply; technical and technological innovations; price shocks, etc. The theory has become widespread recently political business cycle(political business cycle), proposed by the American economist William Nordhaus, which connects the cyclical fluctuations of the economy with the presidential election calendar. If during the election period the country experiences a favorable economic situation (low unemployment and low inflation), it is beneficial for the president at the very beginning of his term in office to destabilize the economy, for example, provoke a recession, in order to ensure economic recovery and prosperity by the end of the presidency and be elected for the next term.

In reality, all these reasons can be reduced to one main reason. The main cause of economic cycles - discrepancy between aggregate demand and cumulative supply, between total expenditure and total production. Therefore, the cyclical nature of economic development can be explained either changes in aggregate demand with a constant aggregate supply (an increase in aggregate expenditures leads to growth, a reduction in them causes a recession); or change aggregate supply with constant aggregate demand (a reduction in aggregate supply means a recession in the economy, its growth means a rise).

Behavior of macroeconomic indicators during the cycle

Let's consider how macroeconomic indicators behave at different phases of the cycle, provided that the cause of the cycle is a change in aggregate demand (aggregate expenditures).

In the boom phase, there comes a moment when the entire volume of output produced cannot be sold, i.e. total expenditure is less than output. Overstocking occurs, firms are forced to increase stocks of unsold products (inventories), which leads to a curtailment of production and an increase in unemployment, as firms begin to lay off workers. As a result, total incomes fall (household incomes - due to unemployment, firm incomes - due to the inability to sell part of the production), and, consequently, total expenses are reduced. Households reduce demand for durable goods. Firms are reducing investment demand due to the pointlessness of expanding production in the face of falling aggregate demand. A decrease in total income (tax base) reduces tax revenues to the state budget. The total amount of government transfer payments increases (unemployment benefits, poverty benefits). The state budget deficit is growing. As a result of the fall in total income, imports decrease, which may lead to an increase in net exports and the emergence of a trade balance surplus. Trying to sell their products, firms may begin to reduce their prices, which leads to a decrease in the general price level, i.e. to deflation (in Fig. 4.3, and output is reduced to Y 1, and the price level falls from P 0 to P 1).

Faced with the impossibility of selling their products even at lower prices, firms (as rational economic agents) can:

or buy more productive equipment and continue production the same type of goods(if the demand for them is not saturated), but at lower costs, which will reduce product prices without reducing profit margins, and will also provide the opportunity to increase sales volumes;

or, if the demand for goods produced by the company is completely saturated and even a reduction in prices will not lead to an increase in sales, go to production new type of goods, which will require technical re-equipment, i.e. replacing old equipment with fundamentally different new ones.

In both cases demand for investment goods increases. In industries producing investment goods, a revival begins, employment increases, and firm profits grow. Total incomes rise, leading to increased demand and expanded production in consumer goods industries. The recovery, increased employment (declining unemployment) and rising incomes spread throughout the economy. The economy is starting to pick up. The price level is rising. Tax revenues are increasing. Transfer payments are being cut. The state budget deficit decreases and a surplus may appear. An increase in income leads to an increase in imports, a decrease in net exports and the possible appearance of a balance of payments deficit. A rise in the economy and growth in business activity turn into a boom, into an “overheating” of the economy ( Y 2 in Fig. 4.3, a), after which another decline begins.

The basis of the economic cycle is the change in investment costs. Investment is the most volatile part of aggregate demand (aggregate spending).

Graphically, the cycle can be represented using a model AD- AS (Fig. 4.3). In Fig. 4.3, a shows the economic cycle caused by changes in aggregate demand (aggregate expenses), and in Fig. 4.3, b - changes in aggregate supply (aggregate output).

In conditions when a recession in the economy is caused not by a reduction in aggregate demand (aggregate expenditures), but a decrease in aggregate supply, Most indicators (real GDP, unemployment rate, total income, company inventories, sales volume, company profits, tax revenues, transfer payments, etc.) behave in a similar way. The exception is the indicator of the general price level, which increases as the recession deepens (Fig. 4.3, b). This is a situation of stagflation (point B in Fig. 4.3, b) - a simultaneous decline in production (from Y* to Y 1) and an increase in the price level (from R 0 before R 1). Investments also form the basis for exiting such a recession, since they increase the stock of capital in the economy and create conditions for the growth of aggregate supply (shift of the curve SRAS 1 right to SRAS 0 ).

Rice. 4.3. Economic cycle in the model AD- AS

Business cycle indicators

The main indicator of the cycle phases is the annual GDP growth rate(growth rate - g), which is expressed as a percentage and calculated using the formula

Thus, this indicator characterizes the percentage change in real GDP (total output) in each subsequent year (Y t ) compared to previous (Y t - 1), i.e. in fact it is not the growth rate, but GDP growth rate. If g - positive value (g > 0), this means that the economy is in an expansion phase, and if negative (g < 0), then in the decline phase. This indicator is calculated for one year and characterizes the rate economic development- short-term(annual) fluctuations in actual GDP, in contrast to the average annual growth rate ( g a - annual growth rate), characterizing the rate economic growth, those. long-term trend of increasing potential GDP.

Depending on the behavior of economic quantities at different phases of the cycle, the following indicators are distinguished:

procyclical, which increase in the recovery phase and decrease in the recession phase (real GDP, total income, sales volume, company profits, tax revenues, securities prices, import volume);

countercyclical, which increase in the recession phase and decrease in the recovery phase (unemployment level, the volume of transfer payments, the amount of inventories of firms, the amount of net exports, the state budget deficit, etc.);

acyclic, which are not cyclical in nature, and the value of which is not related to the phases of the cycle (export volume).

Business cycle concept represents fluctuations in economic activity, that is, the alternation of economic recession and recovery. These contractions and expansions of the economy are periodic, but not regular, that is, they are not strictly cyclical.

There are four in duration type of economic cycles:

• short-term ( Kitchin cycles) - 2-3 years;
• medium term ( Juglar cycles) - 6-13 years;
• Kuznets cycles ( Kuznets rhythms) - 15-20 years;
• Kondratiev cycles- 50-60 years.

Phases of the economic cycle.

Each type of cycle (especially medium-term Juglar cycles) has four active cycle phases:

1. Rise (or revival) - growth in production and employment, inflation rate is low, introduction of innovative technologies.
2. Peak (or top) - the highest stage of economic recovery. Unemployment is closest to the level of full employment, all resources (material and labor) are used to the maximum. Inflation may increase, and saturated markets increase competition.
3. Recession (or recession) is a reduction in production, investment and business activity. Rising unemployment. Lasts from 3 months or more.
4. A trough (or depression) is the lowest point in economic production and employment. Usually this phase cannot be long, although there are exceptions (the ten-year Great Depression in the USA).

Causes of economic cycles economists usually associate with real economic situation in the country. Business cycle theory is that the reason for the downturns and upswings of the economies of industrial countries is associated with the emergence of new technologies, changes in prices for resources and other real factors. In agricultural countries, the cause of recession and recovery is the harvest or failure of the harvest, in short, these are also real factors. Another type of real factors is force majeure (natural disasters, war, revolution, etc.).

Recession- the most “subtle” phase of economic cycles, because under certain negative circumstances it can turn not into depression, but into crisis. Although, perhaps, the depression phase and the concept of economic crisis are not entirely correctly reflected in the theory of economic cycles.

Economic crisis.

Economic crisis- this is a drop in production on a significant scale, accompanied by an imbalance of supply and demand for goods and services.

Economics is not an exact science (like mathematics), but also not a humanitarian science (like philosophy with its multiple theories and hypotheses). The definition of different terms may vary among different authors in economic theory. Sometimes even within the same school (textbook, article). The same term may have different definitions, or different terms may have similar definitions. This can mislead the one who studies the material, so the only way out in such a situation is to rethink the source material yourself. The concept of the phase of recession, depression and economic crisis has been viewed differently at different times. Economist Murray Rothbard became interested in this problem of classification and definition. Once upon a time, when there were no such definitions, sharp declines in the economy were simply called panic. The prolonged period of panic began to be called depression (naturally, we remember the source - the depression of 1929-1939 in the USA). Then the term depression began to cause people (pardon the pun) to panic. And in 57-58, during the next crisis, “we defeated the depression” and were already dealing with a recession. Economists also did not like the concept of recession; they began to call it a harmless phase of the economic cycle; and people after ’58 experienced several “downturns,” but not a single recession. Later, the recession was also replaced by more tolerant “slowdowns” in economic growth, “deviations” in economic development. I hope my irony is clear, as well as the fact that all this time people have been faced with the same phenomenon - a crisis. No matter what you call a janitor, even a broom operator, it won’t make it any cleaner. We will return to this issue a little later.

Basic signs of economic crisis:

• damage resulting from economic activity;
• the previous model of activity is no longer effective;
• a decision must be made immediately, otherwise the consequences will be catastrophic;
• there is a chance for a new stage of development (sometimes illusory).

Types of economic crisis - financial crisis(the growth of fictitious capital outpaces the growth of real capital, the fall in prices of final assets) and energy crisis(limited resources, rising prices for energy resources, problems with mining and development of new deposits).

An economic crisis can also have positive aspects, because in theory it can update the existing political or ideological situation in society for the better (or maybe for the worse - we know several such examples).

Let's return to the problems of the terms “crisis” and “depression”. Based on the above, it is most prudent to call an economic crisis the worst variant of the bottom phase (depression) in the economic cycle. Simply put, a crisis is the same phase of the cycle as a depression, only more protracted and with worse economic consequences. Moreover: with this consideration, the crisis finds its place in economic theory, as a phenomenon not spontaneous, but natural, depending on the economic policy of the state during a recession. This definition of a crisis excludes it as a spontaneous phenomenon. And this is true, because a crisis can and should always be predicted and prevented.

The cyclical nature of the economy is a special form of development with uneven economic growth at different periods, which are called stages or phases of the economic cycle.

The economic cycle includes four phases:

• crisis (recession, recession),
• depression (stagnation),
• revival (expansion),
• a rise ending in a boom or peak.

Thus, economic cycles or waves are periodic fluctuations in economic or business activity during which market economy passes from one phase to the next similar one.

Let's consider the features of each phase of the economic cycle.

The phases of the business cycle are shown in the figure.

The first phase of the economic cycle is a crisis, i.e. a sharp disruption of the existing balance.

A crisis differs from an imbalance between supply and demand for a particular product or in any sector of the economy in that it arises as a general overproduction, accompanied by a rapid fall in prices, bankruptcies and shutdowns. manufacturing enterprises, rising loan interest rates, unemployment.

A crisis is the most destructive phase of any industrial cycle. This is caused by its surprise for entrepreneurs; they, as a rule, are not ready for it. Therefore, the crisis has the character of a collapse. Before it, the economy was thriving in all respects, everyone was making big profits, and then a crisis began, and the foundations were collapsing not in just one industry, but in all of them at the same time.

In the downturn phase of the economic cycle, demand begins to decline, while supply remains at the same level. Enterprises operate by producing products in larger volumes than required by the current market situation. The market turns out to be overflowing with goods, demand is rapidly decreasing, but production continues, although the size of inventory is already very large. A rapid drop in prices begins, interrupting the mechanism of capital circulation. The crisis of non-payments, lack of cash, and difficulties with sales lead to a belated but rapid curtailment of production, which leads to an increase in unemployment and a decrease in the purchasing power of society, which further complicates sales.

A period of collapses begins, enterprises close, banks “burst”, as loan defaults are widespread. During the crisis phase of the economic cycle, unemployment increases sharply, reaching its critical point. Naturally, in such conditions no one thinks about investment. Firms are unable to pay current payments, as capital is “frozen” in the form of unsold goods.

At this stage of the economic cycle, in a recession, there is a general pursuit of money, so the loan fee - the loan interest rate - is rapidly growing. Collapses stock exchanges, a wave of bankruptcies and business closures mark the end of the crisis and the beginning of the depression. The recession presents such a bleak picture. The actual recession phase in the economic cycle usually does not last long; the crisis looks long-lasting if it is combined with depression.

Depression (stagnation)- This is a phase of the economic cycle in which some stabilization of the situation occurs. “Depression is a period of adaptation of economic life to new conditions and needs, a phase of finding a new equilibrium.”

The crushing fall stops, since there is nowhere else to “fall”. Macroeconomic indicators, prices, wages, unemployment are stabilizing at a certain level. After the decline ends, a growth trend does not appear immediately, since production is carried out on a narrowed base. This is due to the fact that manufacturers are afraid to expand production due to a lack of confidence that there will be sufficient demand for the products produced.

During the depression phase of the economic cycle, confidence in a stable market environment is difficult to restore. Entrepreneurs look around with caution, even after some stabilization of demand, afraid to invest additional funds in their business. This phase is long-lasting and may be the longest in the entire economic cycle. Stagnation can last from several months to several years.

With general stagnation in the economy, only one indicator continues to change: the interest rate is decreasing due to the fact that the “surviving” entrepreneurs have free cash due to low production costs, because wages have frozen at their lowest point. If we take the classic version of the economic cycle, then in this phase the interest rate on monetary loans drops to its lowest point within the given cycle.

During the depression stage, prices stabilized at low levels stimulate consumption and the economic cycle continues. As a result of increased demand for civilian goods, demand for means of production also increases. But the crisis showed the insolvency of fixed capital in a technical and technological sense. To renovate it, the first investments are made, and if they are successful, the level of investment begins to slowly increase. Production is starting to slowly pick up. The next phase of the economic cycle begins - the recovery stage.

Revival– this phase of the economic cycle is characterized, first of all, by the expansion of production of means of production. Therefore, the impulse begins with enterprises producing equipment and elements of fixed capital. “The revival phase is a phase of slow growth in production caused by the first successful investments, a gradual increase in prices, entailing an increase in wages, an increase in the level of employment, and profits. The reaction to this is an increase in interest rates.”

A characteristic feature of this phase of the economic cycle is the absence of clear boundaries for the beginning of the phase. This is due to the fact that after a depression, various sectors of the economy begin to emerge from it after different periods of time. During the period of recovery, entrepreneurs dare to take their first steps forward, discovering that the risk is completely justified, and investment yields profit. Production expands following the growth in demand, unemployment decreases, and wages rise. At some point, economic indicators reach pre-crisis levels, and then the next phase of the economic cycle begins - recovery.

It is the achievement of the pre-crisis level of production that marks the end of the recovery and the beginning of the recovery phase of the economic cycle.

Climb– all economic indicators begin to increase at a much faster rate than in the previous phase. Prices begin to rise, but they are compensated by an increase in wages, as a result, the entire volume of output is absorbed by the growing demand of the population. However, in this phase of the economic cycle, the condition must be met that the rate of price growth exceeds the rate of wage growth. The consequence is an increase in employment, and labor resources become the only limiting factor in further development. “The acceleration of economic development can also be seen in waves of innovation, the emergence of a mass of new goods and new enterprises, in the rapid growth of capital investments, stock prices and other securities, interest rates, prices and wages. Everyone produces and trades at a profit.”

Naturally, this cannot continue indefinitely, and at some point the rise phase ends at the highest point of the economic cycle, called a peak or boom. During this phase, discoveries are made that allow the economy to reach a new level within a given economic cycle, but the introduction of new technologies inevitably leads to an increase in production costs, resulting in an increase in prices for manufactured goods without an increase in wages. This leads to a decline in consumer opportunities. The disproportion between supply and demand is growing. The economic boom abruptly turns into a crisis of the entire economic system, the economic cycle ends, and a new one begins.

The paradox of the recovery phase lies in the fact that after the difficult overcoming of the crisis and its consequences, the economy, within the framework of the economic cycle, through the development of crisis factors, is rapidly moving towards a new crisis.

New features of economic cycle phases

Currently, economic cycles and crises in countries with developed markets have acquired new features and characteristics. The foundation for this was the anti-crisis policy of the state, applied in all countries following the capitalist path of development, and the development of international integration, the socialization of production and capital. Currently, the crises in Western countries are different from the Russian crises. The following features of the modern economic cycle can be highlighted.

Firstly, crises have become much more frequent, the duration of cycles has decreased to 5–7 years. At the end of the 19th century and the first half of the 20th century, the duration of the cycles was 11–12 years.

Secondly, the nature of the onset of cycle phases has changed. In the past, phases of the cycle, such as crisis or recovery, occurred at different countries at different times. Due to this, the destructive power of the cycle was less than at present, when the phases of the cycle occur simultaneously in most countries. This is due in large part to the fact that, as a result of the increased integration of national economies, a crisis in one country generates a crisis in other countries. A kind of chain reaction is happening in the business world.

Thirdly, as a result of the policy of countercyclical regulation, the entire course of the cycle changed. Sharp boundaries disappeared, phases began to smoothly transition into one another. This policy also determines the phenomenon of “falling out” of some phases from the course of the cycle. For example, after a crisis, a recovery could immediately occur, bypassing the depression phase (Fig. 2).

Smoothing of economic cycles is the result of the application of countercyclical regulation

Fourthly, since the late 60s. The cyclical crisis is accompanied by rising inflation. Unemployment is becoming chronic and affecting new categories of workers. In fact, a new type of crisis economy has emerged - a stagflationary economy.

Fifth, there has been a change in the nature of crises. After a series of cycles with weak crises and short-term depression or no depression at all, a crisis occurs that covers all spheres and sectors of the economy. The power of the crisis is enormous, and all countries are involved in it.

Features of economic development cycles

An important feature of cyclical fluctuations is the difference in fluctuations in levels of employment and output in industries producing capital goods and durable goods, and industries aimed at producing non-durable goods. The former react to cyclic fluctuations with much greater force than the latter. The reasons for this lie in the following.

1. The purchase of new equipment or durable goods can be postponed, since they are not essential items and demand for them is sharply reduced.
2. In addition, there are a small number of firms in the capital goods market at the same time, and this oligopolistic nature of the market allows management to quickly reduce the number hired workers and production volumes during recessions.
3. At the same time, prices for their products remain approximately at pre-crisis levels.
4. The level of employment and production volumes in enterprises producing non-durable products cannot be subject to strong fluctuations, since the markets for these goods are more highly competitive and firms cannot counteract lower prices by reducing the number of employees and the volume of output.

Economic cycles have never been similar to one another; each of them has its own characteristics.

Cycles may lack some phases; for example, a crisis may be immediately followed by a recovery.

Between crises, the business world does not remain calm. The economy may experience major or relatively minor downturns and disturbances. In relation to economic cycles on this occasion, “German researchers have taken root the term pre-crisis (Vоrkrise) - a short-term phenomenon, but often heralding the approach of a catastrophe.”

There are the following main types of crises:

• cyclic,
• intermediate,
• partial,
• industry,
• structural.

Types of crises in economic cycles

Types of crises	Description
Cyclical crisis	The cyclical crisis is the most profound crisis in its impact. It covers all areas and sectors of the economy. Feature of this crisis: the disruption of the existing equilibrium causes the organization of production at a qualitatively higher level. As a result, the next cycle will begin on a qualitatively different economic basis. Obsolete equipment is being replaced and new equipment is being introduced; production costs are reduced; the structure of production comes into line with the economic requirements of society.
Interim crisis	The interim crisis does not cover all sectors of the economy; it is local and short-lived. It is a timely response to emerging contradictions and imbalances in the economy. As a result, the revitalization or recovery phase may be interrupted for some time. Intermediate crises are not particularly acute; they smooth out contradictions, softening the cyclical crisis, which turns out to be less deep and destructive.
Partial crisis	A partial crisis can occur both during an upswing and during a depression or recovery. The crisis affects only one specific area. For example, the financial crisis of 1997 affected the monetary sphere in almost all countries, although it began on the stock exchanges of Southeast Asia.
Industry crisis	The industry crisis covers related sectors of the economy. The reasons for its occurrence may be rising prices for raw materials and energy resources, cheap imports, the natural aging of industries, the emergence of new ones, and changes in the industry structure.
Structural crisis	A structural crisis usually lasts for several economic cycles. The need to radically change the structure of production using new technological advances is the main cause of structural crises. Examples of structural crises include the energy, raw materials, and food crises of the 70s and 80s.

The paradox of crises is that in this phase of the economic cycle, not only the limit of development is revealed, but also the impetus for further development of the economy. This is a kind of “stimulant” with destructive properties and consequences, after the onset of which, willy-nilly, we have to create new economic realities.

During the crisis phase of the economic cycle, the motives for reducing production costs first sharply appear and new opportunities are sought for this. Then there is an awareness of the need to update production and economic activities on a new technical and technological basis. Having marked the end of one economic cycle, the crisis begins the next one in this way.

Crisis and depression are always followed by recovery. As a result of crises, the economy does not collapse completely, but moves to a qualitatively new level of development.

Types of economic cycles

In economic life there are a variety of fluctuations that are objective in nature. Of these, four types of economic cycles most commonly used by economists can be identified.

1. Renewal cycles for individual capital elements are 2–4 years.
2. Fixed capital renewal cycles are 7–12 years.
3. Renewal cycles for parts of buildings and structures are 18–25 years.
4. Cycles associated with demographic processes and agricultural production – 45–50 years.

The renewal cycles of individual elements of capital are called Kitchin cycles. These are small cycles that are associated with fluctuations in global gold reserves. Construction cycles are called Kuznets cycles, and they are associated with the periodic renewal of dwellings and certain types of industrial structures.

The main interest for the business world is the Juglar cycles associated with the renewal of fixed capital. This type of economic cycle has other names: business cycle, industrial or production cycle. When studying economic cycles, economists paid attention to the effect of greater production growth national income with relatively lower capital investments. This effect is called acceleration.

The essence of the accelerator is that an increase in demand for consumer goods leads to an increasing demand for means of production, and, consequently, for investment. Acceleration generates, on the one hand, instability in the economy, on the other hand, during periods of recovery and recovery, it contributes to the growth of capital investments, which accelerates the cycle. But in the phases of crisis and depression, due to the existence of the accelerator, the destructive power of the recession increases, because the reduction in investment outstrips the reduction in production.

The accelerator is the ratio of investment to production growth or national income and is expressed by the formula:

Where V is the accelerator, I is investment, D is income or finished products, t is the corresponding year.

The theory of long-term or “long waves” was developed by the Russian scientist N.D. Kondratiev in the 20s. XX century. According to it, in the history of economic development, periods of about fifty years with accelerated or slow development can be distinguished. After analyzing data for 140 years, Kondratiev identified three cycles of economic development with “increasing” or “decreasing” waves.

Upward wave - since the late 80s. XVIII century to 1810–1817

Downward wave – from 1810–1817. until the period 1844–1851

Upward wave - from 1844–1851. until the period 1870–1875.

Downward wave - from 1870–1875. until the period 1890–1896

Upward wave – from 1890–1896. until the period 1914–1920.

Downward wave - from 1914 to 1920.

If we follow his theory further, the lowest point of the downward wave will be right at the period of the Great Depression. And then during a serious crisis in the mid-70s. XX century. Kondratiev explained the existence of large cycles by different periods of functioning of economic goods, the production of which also requires spending different times, especially on the accumulation of capital for their creation. The next breakthrough in scientific and technological progress marks the beginning of a new cycle. Then, during the rise stage, the products of this breakthrough are widely introduced.

If we analyze the long Kondratiev waves, we can notice the following feature: industrial cycles occurring during the period of an upward wave are characterized by long and powerful rises and relatively short and weak depressions. At the same time, industrial cycles of a downward wave have completely opposite characteristics.

Research into the patterns of long-term economic development has made it possible to generalize them into the theory of technological structures.

A technological structure is an integral complex of technologically related industries and corresponding technical and economic paradigms, the periodic process of sequential replacement of which determines the “long-wave” rhythm of modern economic growth.

The chronology of technological structures corresponds to Kondratieff’s theory of long waves; according to this, the following types of economic cycles or waves are distinguished:

1. The first wave (1785-1835) is the first technological structure based on textile production technologies.
2. The second wave (1830-1890) is the second technological structure, formed on the basis of steam engines, railway and water transport based on them, as well as ferrous metallurgy and machine tool building.
3. The third wave (1880-1940) is the third technological structure, the core of which was the electric motor and steel production.
4. The fourth wave (1930-1990) is the fourth technological structure based on the internal combustion engine and petrochemical production.
5. The fifth wave (1985-2035 presumably) is the fifth technological structure, formed on the basis of the semiconductor industry and technologies for the production of microelectronic components, as well as information technologies and biotechnologies.

During each structural crisis of the world economy and each depression that accompanies the process of replacing dominant technological structures, new opportunities for economic success open up. Countries that were leaders in the previous period are faced with a depreciation of capital and the qualifications of those employed in industries of an obsolete technological structure, while countries that have managed to create the groundwork in the formation of production and technological systems of a new technological structure find themselves as centers of attraction for capital released from obsolete industries. Each time, a change in the dominant technological structures is accompanied by serious shifts in the international division of labor and a renewal of the composition of the most prosperous countries.

Cyclicality can be considered as one of the ways of self-regulation of a market economy. Cyclicity is the fundamental basis for the development of not only a market economy, but also the entire society as a whole. If cyclicality did not exist, then the development of the entire society would stop somewhere at the level of the Middle Ages.

Literature

1. Bunkina M.K., Semenov V.A. Macroeconomics. – M.: Dashkov and K, 2008.
2. Zhuravleva G.P. Economic theory. – M.: INFRA-M, 2011
3. Galperin V. Macroeconomics. – St. Petersburg: Economic school, 2007
4. Sazhina M.A. Economic theory. – M.: INFRA-M, 2007.
5. Shishkin A.F. Economic theory: In 2 books. Book 1. – M.: VLADOS, 2002.
6. Economic theory. / Ed. V.D. Kamaeva. – M.: VLADOS, 2004.
7. Salikhov B.V. Economic theory. – M.: Dashkov and K, 2014.

D

It has been noticed for a long time that cyclical fluctuations occur in the economy. The researchers set out to determine the causes of these fluctuations, their consequences and possible ways influence on this process.

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

What is an “economic cycle”, what phases in the economic cycle and their description - we will consider in this material.

Business cycle and phases of the business cycle

At the end of the 1960s. American President L. Johnson said the following: “We have gotten 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 aimed at preventing fire cycles before they start."

Objective reality turned out to be stronger than scientific forecasts. Currently, none of the serious economists disputes the existence of the cyclical dynamics of a market economy.

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

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

Economic cycle

Economic cycle (business cycle) - regular fluctuations in levels of production, employment and income, usually lasting from 2 to 10 years. The reasons are: periodic depletion of autonomous investments; weakening of the multiplier effect; 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 (increased price levels, depreciation of the national currency) and unemployment (low levels of production and employment).

Cycles can be caused by shifts 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 increases in labor productivity, stimulated by the process of unbundling of enterprises and the widespread use of information technology.

The cycle can be divided into two periods: downward (fall in production) and upward (increase in production). Because economic booms and busts, which are the essence of the business cycle, play a key role in fluctuations in economic (business) activity, economists call such cycles business cycles.

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

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

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

Potential GDP is the volume of production that is achieved when resources are fully employed.

Full employment of resources is possible in the absence of cyclical unemployment, i.e. it is assumed natural level unemployment in the amount of 5.5-6.5% of total number workforce and unutilized production capacity at 10-20%. These figures may vary from country to country, but in all cases full employment resources means the presence of only structural unemployment.

Business cycle phases

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

Expansion phase

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

Decline phase

Decline phase, crisis. An inevitable consequence of a boom is a turn in the development of the cycle, when production growth is replaced by its decline. This indicates the onset of a crisis phase. An increase in unsalable inventories leads to a decrease in production volumes. Industrial investment is reduced and, consequently, the demand for labor falls. This means an increase in unemployment and 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 decline or slowdown in the growth of commodity prices.

Depression phase

IN depression phase The fall in GDP and the increase in unemployment are slowing down significantly, the volume of investment is close to zero. Therefore, during this period the economy is characterized by stagnation in production, sluggish trade, 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. With it, the movement of all economic indicators changes direction, income and employment begin to grow again. When enterprises bring their production volume to the highest point reached in the previous cycle, economic recovery begins.

What reproductive functions are performed by these phases of the economic cycle?

The main phase of the cycle is the crisis (decline in production), since it represents a mechanism for the destruction of old proportions, creating conditions for the future development of production. The crisis performs its “cleansing” function through the price mechanism. During the crisis phase, commodity prices for obsolete products decrease, interest rates and stock prices fall, company profits decrease, and many of them incur 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 its fixed capital through its depreciation and even destruction. This stimulates the beginning of a massive renewal of production capital on a new technical basis. In a crisis, no entrepreneur can wait for the complete physical wear and tear of machinery and equipment - the crisis forces everyone to carry out widespread replacement of many elements of fixed capital. As a result, new demand is automatically born.

The 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 inventories, etc. Its reproductive function is adaptation to new proportions. During the depression phase, the goal facing firms (profit maximization) again becomes tempting, as production costs have decreased.

Revival phase

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

During an upswing, when the dynamics of production are entirely subordinated to the desire for profit (while the dynamics of demand are determined mainly by the dynamics of wages), supply increasingly outstrips demand, creating the preconditions for a future recession. This means that the rise also performs a corresponding reproductive function: production strains forces, going beyond the limits of effective demand, which increases the contradictions in the reproduction mechanism.

Features of economic cycles in modern conditions

Cyclicality in the development of a market economy has been observed for almost 200 years. The first industrial crisis erupted in England in 1825, then in 1836 there, 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 global cyclical crisis. Then came the crises of 1873, 1882, 1890. The most devastating crisis was 1900-1901. It began almost simultaneously in Russia and the United States and primarily hit the metallurgical industry. Having struck the American metal market, the crisis spread to England, then to Europe, causing a significant drop in production in the textile, construction, chemical industries, and mechanical engineering. The recession was followed by a significant decline in prices for the products of these industries.

The most severe crisis

In 1929-1933. The economies of Western countries have 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 farms We have repeatedly faced both crises and economic booms, 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 waves of business activity of a certain duration, as regular as ocean tides or the rising and setting of the sun.

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

If in 1854-1938. The US economy was in a phase of production decline for 45% of the entire calendar time, then in 1945-1989. decline phases occupied only 26% of calendar time. At the same time, the amplitude of fluctuations in production volumes has 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, resulted in a contraction of real GDP of only 1.4%. This recession was shorter and more moderate than the two recessions that preceded it, from 1973 to 1975. and 1981-1982

The cyclical nature of economic development has different effects on the state of different industries. The sectors that are most affected by the recession are those producing capital goods and durable consumer goods (cars, furniture, household appliances). This is because during periods of economic hardship, people tend to postpone the purchase of such goods for the future, giving preference to 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 the modification is not limited to just changing the duration of recessions (recessions) and rises (booms). The very configuration of the cycle and 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 crisis. It is not only a form of temporary resolution of pressing 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, as well as the competitiveness of products.

The classical crisis performed its “cleansing” function mainly through the price mechanism (in the 19th century, during the crisis, prices fell significantly more than the volume of production). The reduction in prices for goods and factors of production served as the basis for the establishment of new price proportions. Adaptation to them was carried out primarily during the depreciation of fixed capital. When the process of massive capital renewal took place, prices rose again.

What qualitative changes has the modern cycle, especially the crisis phase, undergone? When answering this question, you need to keep in mind that the modern economic cycle is significantly influenced by a number of special factors:

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

Impact of monopoly

The influence of a monopoly is that production falls and stops while monopoly prices remain high. Observations show that not a single post-war cycle (except for the 1948-1949 cycle) is associated with a fall in prices. The scale of price increases increases from crisis to crisis (i.e. from cycle to cycle).

Because prices do not fall, firms manage to make a profit even as they reduce production. At the same time, maintaining a high price level complicates the process of a one-time mass 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 fiscal policy. During a crisis, government orders to private enterprises, as well as government construction, sharply expand to stimulate production growth.

The state is also activating tax instruments budget policy to regulate capital investment and consumer demand. In order to counter-cyclical tax regulation, taxes are legislatively reduced during periods of crisis and increased during periods of recovery. These methods are called built-in stabilizers because they operate automatically within the economic system. During recessions, tax revenues decline and government spending increases. Taxes are reduced because sales are reduced, and expenses increase as a result of increased unemployment payments, bankruptcy insurance, etc. During periods of expansion, built-in stabilizers act in the opposite direction (taxes increase, transfers decrease).

An important tool for counter-cyclical regulation of the state is the use of credit policy through a reduction in the interest rate charged central bank when providing loans to commercial banks. Decline discount rate leads to lower 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). The increasingly accelerating pace of scientific and technical progress determines the acceleration of the renewal of fixed capital, which is observed at all phases of the cycle, including the crisis phase. As a result, overproduction of goods such as characteristic crisis, is replaced by overproduction of capital and chronic underutilization of production. This leads to the erosion 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 has become global in nature. A crisis in one country entails crisis phenomena in other countries, resulting in all world economy is drawn into cyclical fluctuations. So, in 1974-1975. Leading Western countries simultaneously entered a global economic crisis of overproduction. In 1987-1989 A cyclical boom also began simultaneously in all major countries. After a slight recession that lasted less than a year in 1990-1991, the United States and Western European countries again moved into a synchronized economic recovery. This is explained by the internationalization of production and the transition of countries to a new technological basis of production, which further enhances the international nature of factor markets (raw materials, materials, equipment, labor) and causes global structural crises.

Thus, the global economic crisis of 1957-1958. marked the beginning of a global structural crisis of overproduction of raw materials on the world market in 1958-1963. This was facilitated by technological changes 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 changes, is still subject to cyclical fluctuations. At the same time, as observations show, developed countries managed to avoid depressions that occurred 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 on its own, however, but thanks to a deeper understanding of the mechanisms of macroeconomics, which allows governments to take monetary and fiscal policy measures that prevent downturns from becoming a long, cumulative process.

Economic cycle and phases of the economic cycle. Results

1. Economic 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 oscillatory 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) occur due to various reasons:

1. 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);
2. Demographic fluctuations, caused, for example, by a noticeable drop in the birth rate or an increase in mortality, can have a significant impact on activity, resulting in the formation of “demographic holes” entailing fluctuations in population dynamics and, consequently, in the level of employment over a period of 20-25 years ;
3. the source of fluctuations may be the service life during the period of renewal of various elements of fixed capital: inventories (3-4 years); machinery and equipment (8-10 years); buildings and structures (20-25 years).
   • In addition, there are fluctuations that are not sector-specific in nature, but appear in all areas of economic activity over long periods (about 50 years). Such fluctuations are known in economic science like Kondratiev cycles (named after the Russian economist N. Kondratiev). Long waves may 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 generally distinguish four phases of the cycle: recovery (boom); crisis (recession); depression (bottom); revival (expansion). A crisis phase that lasts more than six months is usually called an economic recession. Deep and prolonged recessions with devastating economic consequences are often called depressions (the Great Depression of the 1930s). Currently, the concept of depression has fallen out of use 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 fall 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 depression phase production and employment, having reached minimum values, begin to gradually revive based on new proportions and innovations.

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

During the recovery phase new enterprises come into operation, unemployment decreases, wages, investments and the volume of real capital increase. Due to the rapid expansion of production and demand for credit, loan interest rates increase to the level of the average rate of profit. The rise phase ends with a boom (the highest point of rise), after which another decline begins as a result of the imbalances that have arisen.

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

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