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1 Course work Recurrence economic development. Causes of cyclicality in the economy in 2014

2 Plan Introduction ... 3 Chapter 1. Theoretical aspects of the cyclical nature of economic development The concept and types of economic cycles Causes of cyclical fluctuations in modern economic cycle theories Chapter 2. Modern trends in cyclical development Features of the economic cycle at the present stage of development Trends in cyclical development in the Russian economy Conclusion Literature

3 Introduction Cyclical economic development characteristic modern economic system, manifested in periodic changes in the main macro economic indicators. At the same time, at the present stage of economic development, the problem of cyclicality is of particular importance, both in individual countries and in the world as a whole, which is associated, on the one hand, with the processes of globalization, and on the other hand, with the transition of economically developed countries from the stage of industrialization. to the post-industrial (information) society. In this connection, there is a need not only to level the crisis trends that today cover most countries at the same time, but also to accelerate the transition to an economic system of a new quality. Research into the issues of cyclical development of the economy has been going on for a long time. Among the most significant representatives of economic thought who devoted their works to the theory of the cycle, one can name: J. M. Keynes, J. Kitchin, N. D. Kondratiev, S. Kuznets, K. Juglar, K. Marx, J. Schumpeter, R. Harrod, J. R. Hicks, A. Toffler, St. Jevons, T. Malthus, D. Ricardo, J. Sismondi, J.B. Say, R. Lucas, P. Samuelson, R. Houtrey, and others. The analysis of short-term cycles is given special attention in the works of J. Kitchin. The study of medium-term cycles is based on the concepts of K. Zhuglyar and K. Marx. Long-term cyclic fluctuations were investigated by N.D. Kondratiev (theory of long waves) and J. Schumpeter (innovative theory of the business cycle). Superlong cycles were studied by A. Toffler et al. 3

4 The most complete theory of the economic cycle and crises of overproduction of capitalism in the 19th century is contained in the works of K. Marx. Marx identified the most general objective foundations, causes and conditions that give rise to the economic cycle. Unlike K. Marx, the works of J. M. Keynes and his followers (R. Harrod, J. R. Hicks and others) contain not only an analysis of the essence and mechanisms of economic cycles and crises (the accelerator multiplier model), but also a scientific justification a system of targeted measures for effective anti-crisis regulation of the economy. However, despite the rich history of studying economic cycles, economic theory has not yet developed a unified theory of the cycle that explains its nature and causes. The complexity of this phenomenon and new economic realities that change the nature and mechanism of the economic cycle make the topic of studying the cyclical nature of economic development very relevant. The purpose of the work is to study the essence and causes of the cyclical nature of economic development. To achieve the goal, it is supposed to solve the following tasks: - to determine what is meant by the economic cycle; - consider the classification of economic cycles; - to study the reasons for the cyclical development of the economy; - to determine the current trends of cyclical development; - identify trends in cyclical development in the Russian economy. The object of study in the course work are the processes of economic dynamics. The subject of the study is the cyclical nature of economic development and its causes. 4

5 Chapter 1. Theoretical aspects of cyclical economic development 1.1. The concept and types of economic cycles An analysis of the economic educational and scientific literature allowed us to identify the two most common definitions of the economic cycle: 1) The economic cycle is a fluctuation in the level of economic activity, when periods of growth are replaced by periods of recession in the economy. 2) The economic cycle is the process of passing the economy from one phase to the next one, for example, from crisis to crisis. In each cycle, the same sequentially changing phases are distinguished. Nevertheless, it should be noted that in the theory of cycles there is no unambiguous name for the phases of a cycle, and there is also no single point of view on the number of phases in a cycle. Modern theories of economic cycles proceed from the fact that in each cycle there are only two phases: recession (the downward phase of the cycle) and expansion (the upward phase of the cycle). Also in this model, two turning points of the cycle are distinguished: the highest and the lowest. However, in the educational literature, 4-5 phases of the cycle are more often distinguished: crisis, depression, revival and recovery. In a number of sources, the fifth phase of the bottom cycle is also called. These phases are characteristic of the classical (industrial) cycle described by K. Marx. The crisis is an economic situation, which is characterized by the deterioration of all parameters of economic development. In this phase, there is a sharp reduction in production, income, employment, and investment. Sales of products are deteriorating, which leads to overstocking. Unemployment and bankruptcy of enterprises are becoming massive. At the beginning of the crisis, prices rise, but subsequently they begin to fall. The phase of the crisis is replaced by the phase of depression. 5

6 Depression is a situation where such indicators of the economy as wages, rates loan interest, commodity prices, production volumes are at the lowest level. However, depression is distinguished by the fact that there is no further drop in these indicators, but there is no growth yet. Nevertheless, it is in the phase of depression that the prerequisites are created for a further revival of the economy. This is due to the fact that it is in the depression phase that the balance of aggregate demand and aggregate supply is established, which contributes to the reduction of commodity stocks. A low interest rate creates the prerequisites for the renewal of fixed capital. The incentive for renewal is also the low level of prices for both investment and consumer goods. In the latter case, the renewal of capital is designed to increase productivity, thereby reducing the average cost of production, which, in turn, will increase profits in a low price environment. Recovery is a phase of economic recovery. It is characterized by a massive renewal of fixed capital, a reduction in unemployment, an increase wages, prices, interest rates, demand for consumer goods. The recovery phase ends when the economy reaches the pre-crisis level in terms of macroeconomic indicators. The next phase is the ascent. Thus, a boom is a situation where the economy is operating at its maximum. There is a further growth of macroeconomic indicators, production volumes significantly exceed the pre-crisis level, the economy is approaching a state of full employment. Despite the fact that in each cycle the same successively changing phases are distinguished, the duration of the cycles and the reasons that caused them differ. The analysis carried out allows us to say that the main criterion for classifying cycles in the economic literature today, as a rule, is their duration. At the same time, short-term, 6

7 medium-term, long-term and extra-long cycles. However, this classification also reveals the nature of cycles of different durations. Short-term cycles, or stock cycles (Kitchin cycles) are cycles lasting from 2 to 4 years. Cycles associated with the movement of inventory. In other words, these are cycles that are generated by the current conjuncture (a specific ratio of supply and demand that affects the change in the degree of utilization of enterprises and the attraction of additional labor). Currently, the mechanism for the formation of these cycles is usually associated with time delays (time lags) in the movement of information that affect the decision-making of commercial firms. Short-term cycles or Kitchin cycles are named after the American economist Joseph Kitchin, who associated their duration, which he took to be three years and four months, with fluctuations in world gold reserves. Medium-term industrial cycles were revealed in the middle of the XIX century. in the works of K. Juglar and K. Marx. K. Juglar, studying the dynamics of periodic fluctuations in trade, determined the length of economic cycles at 7 11 years (these cycles are called Juglar cycles); he also divided the cycle into three periods of prosperity, crisis and liquidation, substantiating the cyclicality in the economy by money circulation and bank loans. According to Juglar, the regular change of periods of activity and depression of the economy (7-11 years) is caused by the main problem of periodic fluctuations in commodity prices. The period of prosperity of the economy precedes the crisis, and its characteristic feature is the high level of prices. As prices rise, it becomes more difficult to export, and the balance of payments does not favor imports, resulting in an outflow of gold from the country. The crisis approaches when prices rise 7

8 starts to slow down. External factors (war, natural disasters) can accelerate the onset of a crisis, but are not able to lead the economy to a crisis, except in those cases when the economy favors it. An industrial crisis does not occur suddenly, it is always preceded by some kind of excited state of the economy, and these symptoms are so obvious that the approach of the crisis can be predicted. K. Marx's concept was that the cause of cyclical fluctuations in the economy is the periodic depreciation of capital as a result of spasmodic changes in its organic structure (the ratio of constant and variable capital) and, accordingly, a decrease in the average rate of profit. The frequency of jumps is based on the average period of turnover of fixed capital. Briefly, the position of K. Marx can be stated as follows: every capitalist is interested in improving the means of production, since this allows increasing profits. The conditions of competition make capitalists invest more and more money in the technical equipment of production, but the introduction of new technology is connected with the release of workers from production processes. Since the basis of the formation of profit, as K. Marx showed, is hired labor, a reduction in the number of workers causes a decrease in the rate of profit. The economy comes to balance through the crisis. As a result of the latter, capital investment in production is sharply reduced, the need for hired workers increases again, and this leads to an increase in the rate of profit and the introduction of the economy into a new development cycle. In addition, from the theory of K. Marx it follows that crises of overproduction are associated with underconsumption. The transition from simple to expanded production, according to the scientist, does not generate a proportional increase in demand. Overstocking occurs, resulting in a decrease in product prices. 8

9 Long-term cyclical fluctuations were explored by Kondratiev and Schumpeter. N. D. Kondratiev entered the history of economic science as the author of the concept of “long waves” with a period of years. He believed that the scientific and technological process plays an important role in the economy as an internal factor of long-term cyclicality. According to Kondratiev, at a certain time it becomes quite profitable to invest capital in large structures. During this period, a period of new construction begins, when the accumulated technical inventions are widely used and production forces are created. The impetus for the transition to the "downward" phase (the phase of recession) is the lack of loan capital, leading to an increase in loan interest, and, ultimately, to the curtailment of economic activity and falling prices. At the same time, the depressive state of economic life is pushing for the search for new ways to reduce the cost of production, namely, technical inventions. But these inventions will be used in the next "upward" wave, when the abundance of free money capital and its cheapness will once again make radical changes in production cost-effective. At the same time, N. Kondratiev emphasizes that free money capital and low interest are a necessary but not sufficient condition for the transition to the "upward" phase of the cycle. It is not the accumulation of money capital in itself that brings the economy out of depression, but its activation of the scientific and technological potential of society. J. Schumpeter explained long cycles based on the key importance of innovation. According to the theory of J. Schumpeter, the reason for long-term fluctuations lies in the introduction of innovations that significantly change both the technology for the production of goods offered to the buyer and their sets, and this introduction occurs periodically, and not constantly. When existing sets of goods fill the market, further expansion of production is possible only at the expense of those who have left the 9

10 use of goods, but it is impossible to produce a fundamentally new product using the old technology, i.e. you can't expand the market. Thus, basic innovations generate growth in production in advanced industries, which causes an incentive for structural adjustment and economic growth; the market fills up, i.e. the crisis situation is growing, it requires the creation of new markets for the self-growth of capital. In other words, with the obsolescence of the material and technical basis of production, the economic mechanism must be brought into line with the level of development. productive forces, qualitatively changing the productive forces, than to ensure a new long-term upswing of the economy. The summer construction cycles of S. Kuznets, which the scientist associated with demographic processes and, above all, with waves of immigration that affect the pace of construction, are also referred to as a variety of long waves. Super-long cycles are associated with a change in the type of the general civilizational device of production. Thus, the American scientist A. Toffler divides world history into three main eras, or “three waves”. The first began with the agrarian revolution, which took place 10 thousand years ago and meant the transition to settled agriculture. It gave birth to an agricultural civilization. The second came about as a result industrial revolution and led to the advent of modern industrial civilization, lasting for 300 years. The third is born under the influence of the scientific and technological revolution that began in the 1950s. in the USA, Western Europe, Japan and the USSR. It is designed to change industrial society over the next decades. At the same time, if the agrarian civilization was based on a simple commodity exchange (barter), the industrial one was built on a money economy, then the post-industrial, or informational, civilization will be serviced by electronic money. 10

11 The concept of secular cycles is also being developed in the social sciences. The well-known French historian F. Braudel revealed age-old trends. We are talking about cycles lasting 100, sometimes years. The researcher identified four successive secular cycles: gg. (with a peak, or "breaking point" in 1350); gg. (top 1650); gg. (the turning point of 1817) and the modern cycle, which began in 1896 and will end in the years. Braudel believed that the main cause of secular cycles was not technological innovation, but the change of the world economic leader. Italy led the way in the first cycle, Holland in the second, England in the third, and the United States in the fourth. There is J. JIe Goff's hypothesis about summer economic cycles. As an example of such a super-long wave, he considers the period of the XI-XV centuries. For Western Europe starting with the upward trend of its economic development; the turning point occurs approximately in the first half of the 14th century, after which the phase of the rise of medieval civilization is replaced by its decline. According to Le Goff, the upward trend is associated with the wider introduction of windmills and watermills in comparison with Antiquity, which made it possible to use new sources of energy, an increase in the efficiency of agriculture compared to the early Middle Ages, and a building boom caused by ecclesiastical and later secular construction. The downward phase is associated, first of all, with the general crisis of the feudal system, which hampered technological development, the extremely primitive level of credit and financial relations compared to the Ancient World, the deadening of capital, and a number of other reasons. Finally, another theory is the theory of civilizational cycles. N. Ya. Danilevsky spoke about them for the first time. They were further developed in the works of other prominent researchers, such as O. Spengler, A. J. 11

12 Toynbee, L. N. Gumilyov. The theory of civilizational cycles largely refutes the idea of ​​a straightforward or even spiral economic and technological development of mankind as a whole. So, for example, A. Toynbee, in accordance with the theory of civilizational cycles, singles out 13 independent civilizations and 14 satellite civilizations in the history of mankind, not counting societies that have not developed or frozen. The author explains the reason for the occurrence of each of them by the principle of "Challenge Response". By "Challenge" is meant an aggressive change in the external environment or the hostile influence of neighboring peoples. The duration of each cycle is determined approximately in years of active existence, although it can be reduced or increased as a result of external factors. As can be seen from the above review, there is no single reason for the cyclical nature of economic development. We can only say that impulses of different strength give rise to oscillations of different duration. Nevertheless, modern theories of cycles try to explain the nature of this phenomenon Causes of cyclical fluctuations in modern economic cycle theories As can be seen from the classification of cycles given in the first paragraph of the work, scientists who considered cycles of different duration explained their causes in different ways. The current state of cycle theories is such that they lack a single point of view on the causes of the cycle. The economic literature talks about the existence of different approaches to the causes of cycles (models and mechanisms of development). In general, they can be divided into two large groups: 12

13 1. Models (mechanisms) that consider the cause of cyclicity in the imperfection of the construction of the economic system, the appearance of an imbalance in it, which ultimately leads to a change in the economic situation. These models (mechanisms) include: 1.1. Multiplier-accelerator model The concept of this model is based on the fact that economic cycles reproduce themselves. Once started, economic cycles oscillate endlessly. The mechanism of the emergence of the cycle in accordance with this model is described as follows - an increase in demand for products and services of enterprises causes an increase in investment, and as a result, the volume of GDP. At the same time, GDP increases by a larger amount than the volume of investment due to the multiplier effect. For further development and growth of GDP, new investments are required. With growth, all available resources are exhausted, and consumer demand is saturated. As a result, the reverse process begins, investments are reduced, GDP is reduced, and economic indicators begin to stagnate. The process of stagnation ends with reaching the “bottom”, after which the reverse process begins. Monetary concept of economic cycles This concept is based on the assumption of the relationship between fluctuations in economic activity and changes in the monetary sector. The main reason for the economic cycle is a change in supply from the banking system. During the growth phase, the money supply from banks increases and interest rates decrease, during a recession the situation is reversed. The mechanism of the cycle within the framework of the monetary concept was described by R. Houtrey. The impetus for market fluctuations is an imbalance in the money market, a credit shock from the banking system: 13

14 an increase in the size of credit - a decrease in the interest rate an increase in investment an increase in aggregate demand an increase in the price level a decrease in the size of net exports. The combined pressures of inflation (rising price levels, reducing net exports) and credit expansion (increasing credit, reducing bank reserves) lead to a shortage in the money market and an increase in the interest rate, which leads to a decrease in investment and aggregate demand Evolutionary theory The basic concept of this theory economic natural selection, i.e. the development of successful enterprises occurs due to the displacement of less successful enterprises from the economic space. Also, this theory proceeds from the concept of the macro level of the economy, which is a set of smaller economic subsystems in which natural selection occurs, defined as macro generations. The lifetime of macrogeneration is limited; it is formed, lives for a certain time and eventually disappears. The emergence of new macro-generations and the disappearance of old ones explains the cyclical development of the economy. The model of interaction between savings and investments. The model is based on the assumption that the accumulation of savings by the population leads to a decrease in the interest rate, as a result of which the volume of investment increases, and production grows. In the future, as the demand for investment increases, the interest rate rises, reducing the attractiveness of investment, as a result of which production decreases, and savings begin to increase. The specified process in accordance with the model of interaction between savings and investment Psychological models These models are based on aspects of people's behavior and their assumptions about the future. In case their grades are 14

15 are positive, and they suggest that a phase of economic recovery is coming, people increase economic activity, thus generating economic recovery, and as a result of pessimistic assessments of the future, they reduce economic activity, redefining the economic recession. Such models include the theory of imperfect information by R. Lucas. According to this theory, the agents of each individual commodity market evaluate information about a price increase as a result of a supply shock with a lag (delay), not having reliable information at the time of the price increase whether the relative prices of their products have changed (then they tend to increase supply) or whether there has been a general price increase and the relative prices of their goods have not changed (then they won't raise output). At the same time, each market agent thinks rationally and, when prices rise in his market, he believes that this increase is partly caused by an increase in the general price level, and partly there is an increase in the relative (relative to other goods in other markets) prices of his products. This is the reason for the increase in output. 2. Models (mechanisms) that consider the cause of cyclicity in external influences. These models (mechanisms) include: 2.1. Momentum-spread mechanism This model assumes that the economy is subject to random shocks (external influences, impulses) that affect supply and demand. Such shocks (impulses) include decisions government agencies, droughts and natural disasters, etc. A favorable shock may cause an increase in GDP, an unfavorable reduction. These shocks take the economy out of its current state, set off a chain reaction and change the conditions of supply and demand in the economy. Given this random push, production begins to fluctuate until the next push occurs. The discovery that cycles can be generated purely 15

16 random factors was done by the Russian economist Evgeny Slutsky and the Norwegian economist Ragnar Frisch. E. Slutsky and R. Frish. divided the shocks affecting the economy into three groups: - supply shocks - technological shifts, natural disasters, the discovery of new sources of raw materials, fluctuations in world prices for raw materials, changes in the level of nominal wages; - political shocks - the result of decisions of political institutions that affect demand - changes in the money supply, exchange rate, fiscal policy; - shocks in private sector demand (changes in investment or consumer spending). In essence, the proposed set of shocks can be divided into exogenous (supply shocks and political shocks) and endogenous (shocks in private sector demand). productivity in agriculture. During periods of high solar activity, droughts are highly likely to occur and affect agricultural performance. The agricultural crisis is spreading to agriculture-related industries as well as other industries. There are theories linking economic cycles with the activity of the planets of the solar system, as well as the stars and galaxies of other systems. For example, there are studies proving the correlation of the phases of the moon with panics and booms in the stock and commodity markets. 16

17 Chapter 2. Current trends in cyclical development 2.1. Features of the economic cycle at the present stage of development Cyclicity in development market economy observed for almost 200 years. The first industrial crisis occurred in England in 1825. The next one was also in England in 1836, but was also observed in the USA. Another crisis in the United States occurred in 1841. In 1847, the crisis simultaneously covers four countries: the USA, England, France and Germany. The crisis of 1857 was the first global cyclical crisis. Then there were the crises of 1873, 1882, 1890. The most devastating was the crisis years. It began almost simultaneously in Russia and the United States and, first of all, hit metallurgical industry. Having hit the American metal market, the crisis spread to England, then to Europe, causing a significant drop in production in the textile, construction, chemical and engineering industries. The recession was followed by a significant decline in prices for the products of these industries. The period of years was marked by the most severe crisis in the history of economic cycles in the economy of Western countries - the Great Depression, which led to a drop in production by % and an increase in unemployment to 25%. In the subsequent period, market economies have repeatedly faced both crises and economic upswings, but the nature of cyclical fluctuations and their duration have changed significantly. Conducted observations of the course of economic cycles show that in modern conditions the picture of the cycle is changing significantly. 17

18 The change in the nature of cyclicity is influenced, first of all, by such factors as: 1. deepening of the processes of integration and liberalization; 2. strengthening the international division of labor; 3. mass application and rapid development of information and communication technologies, software, nanotechnologies, composite materials. As a result, the economic cycle has acquired new features, there have been changes in the form of the crisis, both in individual countries and internationally. Scientists involved in the study of cyclical fluctuations note the fact that the fluctuations have taken on a smaller scale, which most affected the cycles, which are composed of small cycles (quasi-cycles) and which are repeated every 4-5 years instead of In addition, a smaller range of fluctuations and the intensity of the cycle , lead to the fact that the phase of the crisis appears no longer in the form of a crisis as such, but in the form of a recession. In addition to the crisis, other phases of the cycle have also changed, as well as the form of transition from one phase to another. In most cases, the duration of the depression has decreased, the recovery phase has also become shorter, and the duration of the recovery phase has increased. The transition from the rise to the crisis now occurs more slowly and relatively smoothly, resembling a kind of "crawling" into the crisis. Cyclical crises are often followed by periods of prolonged stagnation of investment, despite the revival and growth of production. According to most scientists, these changes are due, as already mentioned, primarily to qualitative changes in the world and national economies, as well as the activities of the state. In the modern economy, crises and cycles are increasingly influenced by state counter-cyclical regulation, which includes anti-crisis regulation, as well as measures, 18

19 aimed at preventing "overheating of the economy", characterized by an overaccumulation of capital, fraught with the danger of a crisis. According to E. Plekhanova, the direct influence of the state on the cycle is manifested in the following. “The state has an impact on the mechanism of the cycle, due to the very fact of increasing its share in social reproduction. The growth of government spending expands the market for the final product of society, regardless of whether the government sets itself a conscious goal to stimulate demand or not. During crises, the existence of a public market dampens the decline in production, even if government purchases do not expand. Much of the funding is provided through the state scientific research and experimental design developments at the forefront of modern scientific and technological progress. The so-called "automatic stabilizers" operate in the same direction. The state resorts to a conscious counter-cyclical policy, which is implemented with the help of financial and monetary levers. Thus, in most cases, the state managed to prevent the recession from turning into a crisis and ensure a relatively stable development of the economy.” Among the specific features of modern crises caused by qualitative changes in the economy are the following: 1. Due to the deliberate reduction in production by corporations, modern crises are more manifested in overaccumulation production capacity in enterprises than in overcrowding the market with goods. 2. The scientific and technological revolution has a significant impact on the modern cycle. The emergence of new industries based on technological progress, constantly changing the range of their products and pushing aside old, traditional industries, complicates the picture 19

20 modern crises. Crises hit old industries first and hardest, while growth in new industries can continue. The constant introduction of new products into production increases the immunity of these industries to the crisis, and diversification makes it possible to more flexibly maneuver the production resources of corporations, moving investments from one industry to another. The systematic appearance of new goods and services on the market, independent of cyclical fluctuations, creates additional demand. During crises, this factor acts countercyclically, increasing the aggregate demand for consumer goods. 3. Due to the globalization of the world economy, the asynchrony of the cyclical development of Western countries has been replaced by regional cyclicality. The leading place among such regions is occupied by the American-European economic cycle (the United States and the developed countries of Western Europe). As a result, the United States and the leading countries of Western Europe (Germany, France, Great Britain, etc.) enter and exit the crisis almost simultaneously (with a difference of a year and a half). In other words, today changes in business activity in any of major countries region lead to noticeable changes in the economy of other countries in this zone. The economies of Eastern European countries have become inherent in the cyclicality of business activity due to the completion of the process of transformational transition to a market economic system. Russia has also become involved in the cyclical fluctuations inherent in the world market and is currently largely included in the orbit of the US-European economic cycle. At the same time, the Asian economic cycle, which is dominated by Japan and China, is in the process of formation. 4. Slight inflation in the modern economy corresponds to all phases of the economic cycle. Thus, fundamentally new 20

The 21st phenomenon for the phases of crisis and depression was stagflation. According to scientists, the main reason for this phenomenon is the prevalence imperfect competition as a market structure of national economies. This dominance makes it possible to manipulate prices upwards while reducing production volumes and, consequently, supply. 5. Growing signs of a deepening global financial crisis, which puts on the agenda the problem of revising the principles and mechanisms of the functioning of international financial capital. In the context of globalization world economy is divided into two blocks: financial, which demonstrates the existence of a relatively independent transnational capital market, and production (technological), which is a reflection of the international division of labor and the exchange of goods and services based on it. - economic system of the country. This transformation coincided with a deep systemic crisis, which led to a sharp drop in production, a reduction in investment, an increase in inflation, a decrease in the living standards of the population and a deterioration in the external economic situation of the domestic economy. According to domestic scientists-economists, the current stage of the domestic economy is a new economic cycle. Since 1995, Russia has gone through 3 business cycles, and the current recession is already the 3rd in this period of time. The previous low points were reached in the fall of 1998 and in the spring of 2001. The peak of the latest Russian business cycle was reached in the summer of 2008, followed by a decline in total output of 21

22 economics. At the same time, the current recession turned out to be larger in scale than the recessions of 1998 and 2001 (see Fig. 1). Rice. Fig. 1. Comparative dynamics of Russia's real and potential GDP The graphs below show individual groups of indicators of the cyclical dynamics of the development of the Russian economy Number of organizations involved in innovations Number of personnel involved in innovations, thous. The number of created samples of new technology

23 Fig. 2. Dynamics of innovative components of the development of the national economy Based on fig. 2, the following conclusions can be drawn: since 1995, the number of samples of new equipment has a steady downward trend, with unstable (jump-like) dynamics in the number of organizations and the number of personnel. As a result, the innovation component of cyclical dynamics as a whole can be characterized as consistently low over the entire analyzed period, which negatively affects the development of the national economy as a whole. Rice. Fig. 3. Dynamics of the investment components of the indicators of the development of the national economy From Figure 3 it follows that the index of the physical volume of investments from 1994 to 2007 has a steady upward trend; in 1992. Figure 4 shows that the degree of depreciation of fixed production assets is very high, tends to increase annually since 2000, with an annual spasmodic dynamics of the index of their commissioning, helps to stabilize the resulting indicator of the index of change in the cost of fixed production assets (at the level above 100%). At the same time, the annual growth of this indicator can be 23

24 be considered as a positive factor, but when compared with the dynamics of the innovative component as a negative one: increasing the value of fixed assets based on the introduction of exploited analogues into production. Rice. Fig. 4. Dynamics of technological indicators of the development of the national economy. 5. Dynamics of technical and production indicators of the development of the national economy 24

25 The identified negative trends in the innovation, investment, technological components of the development of the Russian economy contribute to the greatest manifestation of originality in the dynamics of technical and production indicators: the profitability of products has a steady downward trend. As a result, there is an abrupt increase in the producer price index (due to rising costs) and sustainable GDP growth. Rice. 6. Dynamics of social indicators of the development of the national economy Among the social indicators, the most interesting is the dynamics of real money incomes, which increased sharply in the years after 2008, have a stable dynamics of stabilization at a low level. Expenditure on final consumption is characterized by similar trends, which may indicate an increase in poverty in Russia. In general, social factors have a steady tendency to stabilize at a low level, i.e. conditions for the development of production in terms of social factors are clearly limited. The analysis carried out allows us to conclude that in Russia during the period under study there was a simultaneous layering of the phenomena of total aging of technologies, mass professions, production 25

26 funds, as well as lagging behind the world's innovation cycles for updating the generating industries of material production. 26

27 Conclusion Based on the results of the research conducted in the course work, the following brief conclusions can be drawn. The development of the economy is cyclical. At the same time, the economic cycle is understood as a fluctuation in the level of economic activity, when periods of growth are replaced by periods of economic recession. In addition, the economic cycle can be viewed as the process of passing a market economy from one phase to the next one, for example, from crisis to crisis. The history of cyclical economic development has been around for about 200 years. The first industrial crisis erupted in England in the subsequent economic cycles were regular. At the same time, it should be said that, despite the successive passage of the same phases during the cycle, economic cycles differ in duration and in the reasons that caused cyclical fluctuations. By duration, short-term, medium-term, long-term and extra-long cycles are distinguished. There is no consensus on the causes of the cycle. The theories existing today, on this issue, can be divided into two groups: those explaining the cause of the cycle by internal factors of the economic system and explaining the nature of the cycle by external factors, impulses (shocks). At the present stage of development, the nature of the economic cycle is undergoing changes, which is caused by globalization and changes in the economic system of most economically developed countries. In Russia, cyclical development has some features associated with the transformation of the national economy. 27

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29 Literature 1. Abramova T.A. Cycles in social development // Economic history with Baranov I.A., Ermolaev M.B. To the question of the theoretical substantiation of economic cycles and their applicability to the Russian economy. // Collection of scientific papers of Russian universities "Problems of economics, finance and production management" with Butorina O.V., Batalova E.V., Fukalova Yu.S. Study of cyclical processes in the Russian economy, taking into account intercyclical recurrence. // Bulletin of the Perm University. Series: Economics S Koptelov I.O. The economic cycle and the essence of its manifestation. // Bulletin of the Chelyabinsk State University with Kurilov K.Yu., Kurilova A.A. The concept of the emergence of economic cycles // Vector of Science of Togliatti State University. Series: Economics and Management With Marx K. Capital. Criticism of political economy. T.3. Moscow: Gospolitizdat, p. 7. Minaker P.A. To the question of the theory of economic cycles and crises // Journal of economic theory with Nosonov A.M. Conceptual foundations of cyclical development // Pskov regional journal S. Plekhanova E. State regulation of cyclical development of the economy. // Bulletin of the Kaliningrad branch of the St. Petersburg University of the Ministry of Internal Affairs of Russia with Titova Yu.A. Methodology of cyclical market development // Economics and Management: Problems, Solutions C

CYCLE DEVELOPMENT OF ECONOMIC SYSTEMS Lecture plan 1. Types of cycles 2. Main phases of the cycle 3. Reason for cyclicity Cyclicity is the movement of the national economy from one macroeconomic equilibrium

1.5 Macroeconomic dynamics. Inflation. Theory of economic cycles 1.5.1 Inflation is a long-term process of a steady increase in the general price level, leading to a decrease in purchasing power money.

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Development National economy in market conditions, it is not carried out in a straight line, but in waves. The essence of the cyclical development is expressed in a certain pattern of alternating periods of economic prosperity and rapid growth in production with periods of sluggish economic conditions and slow growth in production or even its absolute reduction.

There are certain regularities in the flow of cycles of alternation of these periods. In each of the cycles, the same phenomena are repeated. Their alternation made it possible to study them and marked the beginning of attempts to predict new cycles.

Cyclic development economy is very controversial, which served as the basis for the emergence of a large number of points of view on this problem among economists. But there is still no single concept of cyclicity, which undoubtedly indicates the importance of this phenomenon for the economy.

The study of cyclicality, as a kind of fundamental phenomenon in the dynamic development of a market economy, began in the 19th century. It continues to this day. Foreign and domestic economists are trying to develop methods for predicting the course of each cycle so that each phase does not harm the economic development of society.

Not all scientists recognize cyclicality as an economic pattern. However, real life confirms the existence of this process, and cyclicity as a problem cannot but be of interest to modern man.

The concept of cyclicity:

Cyclicity is a form of development of the national economy and the world economy as a whole, it is the movement from one macroeconomic equilibrium on the scale of the economy as a whole to another.

One of the first economists who began the study of cyclicity was K. Marx. He singled out four phases of the business cycle: crisis, depression, revival, recovery. Classical political economy proceeded from the position that the economy can and should be constantly in a state of equilibrium, and did not deal with the problem of cycles; moreover, it denied their existence. In addition, K. Marx was the author of an economic theory that was destructive for capitalism, so his contemporaries did not deal with the question he posed, but refuted all his arguments. Only after J. M. Keynes substantiated the need for state regulation of the market economy due to the cyclical nature of its development, did a detailed study of the nature of cycles and methods of mitigating the consequences of crises on the economy begin.

In modern Russian conditions, the relevance of the problem of cyclical development of the economy is particularly acute.

Reasons for interest in the cyclical nature of economic development

		Description
	Crisis of the 1990s.	After the transition to a market economy, Russia immediately experienced a severe economic crisis caused by radical reforms of shock therapy, problems of enterprises focused on the military-industrial complex, and the lag in a number of industries aimed at the production of goods for consumption. All this resulted in a protracted large-scale crisis until the end of the 1990s.
	The peculiarity of economic development	More than 70 years of socialist development. During the seventy years of development along the socialist path, the capitalist economy has been subjected to excessive discredit. The study of individual phenomena and elements of its development was carried out insufficiently. As a result, our economy was not fully prepared for the economic cycles of capitalist development.
	The specifics of the transition economy	Due to the specific features of Russia's development at this stage, the cycles in our country do not proceed in the same way as they proceed in countries with a developed market and in developing countries. The model of the transitional economy that has taken shape in Russia has determined the essential features of the national economic system. As a result, the cyclical development of the Russian economy has a unique specificity.
	The need to develop a comprehensive anti-cyclical regulation policy	Today, a deep study of the mechanism of the cyclical development of the economy is necessary for the development of a correct economic policy in a transitional economy. Blindly using the experience of Western or Asian countries will not lead to the desired result without taking into account Russian characteristics. So that Russia does not find itself at a disadvantage compared to foreign countries in the conditions of modern and subsequent crises, an effective and efficient policy of counter-cyclical regulation is needed.

Cyclical nature of economic development

The cyclical nature of economic development is manifested in the consequences of cyclicality, which can be divided into negative and positive ones.

Negative consequences of the cyclical development of the economy:

1. The crisis phase of the business cycle is a tragedy for many firms, small producers and especially for ordinary people. During this period, for example, the suicide rate even increases.
2. As a result of periodic industrial crises, a large number of entrepreneurs and ordinary consumers suffer.
3. Production suffers significant losses.
4. During an upswing, production growth lays the groundwork for the next crisis, and the better things look during the upswing, the worse the consequences of uncontrolled growth during the crisis will be.
5. A severe crisis can also cause the country's economy to freeze at the post-crisis level for a long time.

Positive aspects of the cyclical economic development:

1. From the point of view of macroeconomics, in each cycle, crises mean the death of small commodity producers, technologically weak, inefficient industries, which can be called a disease on the body of the economy, and the survival of strong, most competitive, with an excellent organization of production, enterprises.
2. Crises also heal the capitalist economy, forcing it to rise to a new technical level with each cycle, to achieve a greater proportionality of economic development.

The laws of cyclical development of the economy cannot be ignored or considered that crises are caused only by external or internal factors. Cyclicity is a form of development of the national economy and the world economy as a whole, it is the movement from one macroeconomic equilibrium on the scale of the economy as a whole to another.

In fact, cyclicality is the so-called "orderly" of the economy, removing everything that is dying and helping everything that is viable in the economy.

To smooth out the harmful effects of cyclicity, one cannot focus only on theoretical studies. It is necessary to analyze the statistical material for the entire period of the cyclical development of the economy, to investigate the causes that led to this or that crisis in the past.

The cyclical nature of the development of the economy means that the rapid growth of production after a certain period of time is replaced by its crisis, after which economic growth again follows.

Reasons for the cyclical development of the economy

The huge impact of the cyclical development of the economy forced economists to look for the causes of cyclicality in order to learn how to predict the development of each specific cycle. This desire is understandable, because if you predict the development of a phenomenon with a sufficient degree of certainty, you can determine the degree of its influence on each person individually and the whole society as a whole. It is possible to predict the possible development of the cycle only by finding out the reasons for the cyclicity.

The causes of cyclicity, as well as the emergence of any other processes in the economy, must be sought in the economic activity of people.

For example, J. M. Keynes considered the cause of crises in the economy to be an excess of savings from the population and a lack of investment in production, which leads to the emergence of cyclicality and economic cycles. From this follows the theory of underconsumption, according to which crises and depressions are caused by the fact that too much of the current income is saved and not invested in production. The reason for saving too much is the uneven distribution of income. Only those who have a large income can save.

Another important reason for crises, as a source of cyclical economic development, is the excess of production of means of production over consumer goods. This question is central to the theory of overaccumulation. "Industries that manufacture capital goods are much more affected by the economic cycle than industries that produce consumer goods. In the upward phase of the economic cycle, the output of capital goods grows, and in the downward phase, it declines much more sharply than the production of non-durable goods" . It is this disproportion in the production of goods, according to the theory of overaccumulation, that causes the crisis. According to this theory, in a planned system, this cause turns the economy into a samoyed when it begins to function for the production of means of production, while the production of consumer goods fades into the background.

K. Marx also worked on the development of the reasons for the cyclical nature of the economy. Marx came up with the following causes of cyclicality:

1. Contradiction between production and consumption.
2. The high level of organization of production at individual capitalist enterprises comes into conflict with unregulated, spontaneous action. market system generally.
3. The physical life of the fixed capital.

The first reason for cyclicity is due to the fact that the desire for an unlimited expansion of production for the sake of greater enrichment is the main goal of any entrepreneur. They apply the introduction of new technologies, reducing the cost of producing a unit of goods to increase labor productivity. The incentive for this is market competition, a kind of natural selection in the capitalist environment. At the same time, demand is also growing, but, alas, it lags behind the growth in production, and at some point the produced goods do not find demand from buyers, which causes a crisis.

The second reason for cyclicality also leads to an excessive increase in production, but unlike the previous one, it is more susceptible to neutralization.

The third reason for the cyclical nature of the economy is the need to renew fixed capital. The renewal of fixed capital every 10–12 years in the 19th century and every 7–8 years in the 20th century coincides with a phase of recovery in production. It is this reason - the periodic renewal of capital - that sets the time parameter of the economic cycle.

Among a large number of other causes of cyclicity, three most significant ones can be distinguished.

1. The difference in time of circulation of capital in different industries and their relationship.
2. The circulation of capital in some industries contributes to the development of the circulation of capital in other industries, in fact making the development of some industries dependent on the development of others.
3. Therefore, if some, even if not very serious, changes occur in the development of one industry, the development of other industries may respond to this with a crisis.

In modern conditions, an acute problem is the debt burden, which also acts as the cause of the economic crisis, causing the onset of a new cycle. Therefore, "another important reason for the emergence of crises may be the sale of goods and services on credit. For some reason, massive non-payments may begin, which will inevitably provoke a crisis." The non-payment crisis in the literal sense of the word makes it impossible for enterprises to survive and function. This forces plant managers to close them and stop production. As a result, the unemployment rate rises and wages fall. All this leads to underconsumption of goods. The crisis of overproduction begins. But at the same time, the crisis and unemployment are interconnected and condition each other.

A special kind of reason for the cyclical nature of the economy is associated with its militarization. In the period of wars or preparations for them, an increase in investments in the military sphere plays an important role. The militarization of the economy draws money from industries that produce consumer goods. As a result of the outflow of finance from these industries, where they could also reduce unemployment and increase market capacity, a shortage of goods begins, depreciation Money population due to rising inflation. In addition, investment in the economy stops, economic development slows down or even stops or stagnates. The replacement of the word "buy" with the word "get it" in the lexicon of people can be considered a household feature of the slowdown in economic development.

Considering the reasons for the cyclical nature of the capitalist economy, one cannot focus on any one of them. It is quite natural that the causes are not equivalent, but only together they are the basis for the cyclical development of the economy. All these reasons each time occupy a different position in provoking a particular crisis and lead to a change in the economic cycle.

The experience of developing countries with a developed market has shown how high the price of a high level of consumption is: waste of resources, irrational use of capital, imbalance between human activity and its natural environment.

A number of factors hinder the course of social development:

• imbalance of scientific, technical, economic, environmental and social components of economic growth;
• exhaustion of the possibilities of economic regulation systems;
• weakening incentives to work and save.

All these reasons are reflected in the demographic, environmental, energy, raw materials, food and structural crises against the background of the cyclical development of the world economy. Faced with various varieties of these global crises, Russian economy, which experienced many of their negative consequences, exacerbated by the very nature of the functioning of the economic system.

To successfully counter the negative consequences of the cyclical nature of economic development, the following factors are needed:

1. The country must have developed factors of production, avoid significant structural imbalances and systemic problems of an internal nature.
2. The inertial-extensive nature of economic development should be combined with the introduction of innovative technologies, an increase in labor productivity and living standards.
3. The contour of the economic system should be dominated by industrial enterprises of various industries, the production of goods and services should be diversified, Agriculture should provide more than 80% of domestic consumption.
4. Heavy industry and military-industrial complex enterprises must ensure the production of products for domestic use and export.

The implementation of these conditions, taking into account the scale of the economy, makes it possible to minimize the impact of the negative consequences of crises within the framework of economic cycles, taking into account the identified causes of cyclicity.

Conclusion

Considering the reasons for the cyclical development of the economy and certain fundamental features of economic growth, which are non-linearity, unevenness, uncertainty, alternativeness, etc., it can be noted that they are determined by the key role of scientific and technological progress in ensuring modern economic growth.

Literature

1. Keynes J. M. Selected Works. - M.: Economics, 1993.
2. Sazhina M.A. Economic theory. – M.: INFRA-M, 2007.
3. Salikhov B.V. Economic theory. – M.: Dashkov i K, 2014.
4. Shishkin A.F. Economic theory: In 2 books. Book. 1. - M.: VLADOS, 2002.

The development of a market economy is not like a straight line, where everything is monotonous and stable. Usually, it experiences regular ups and downs, which are closed in the framework of successive stages. The cyclical nature of the development of the economy is manifested in the fluctuations of the conjuncture, which is of a periodic nature.

The economic cycle and its phases

The theory of cyclical development of the economy is described in every textbook on a specialized subject. Industrial periods have been analyzed by such famous scientists as Joseph Kitchin, Clement Juglar and Simon Smith Blacksmith. They argued that the economic cycle is a change in business activity in economic system, characterized by undulation and a time interval between the same states of the conjuncture.

There are four phases in the economic cycle:

• Peak (rise). The production of the state is expanded: new goods and services are offered on the market. The population is employed, it has an increase in income.
• Recession (compression). Production is gradually declining, and consumption, investment inflows, GDP levels and profits fall accordingly.
• The economy has bottomed out and has been in that state for some time.
• Revival. Production is growing, generating income.

The cyclical nature of the economy of a particular country may not coincide with a similar process at the level or macroeconomics as a whole.

Internal causes

The consequences of the cyclical development of the economy are manifested at the level of experience. After all, each new stage is not a copy of the previous one: humanity learns from mistakes and makes changes during the next period. Of course, events and politics in the country have a great influence on the cyclicality. There are such internal factors that are displayed on the economy of the state:

1. A reduction in production caused by an overproduction of goods. They are in low demand due to high availability and high prices. In fact, supply exceeds demand.
2. New. For example, with the advent of computers on the market, typewriter manufacturers begin to close businesses or shift capital to the development of other industries.
3. monetary policy. The release of a huge amount of money generates inflation, at the same time their insufficient availability leads to a decline in production and a reduction in investment.

Internal reasons include demographic situation, the development of the social sphere, the level of education, culture in the country and so on. All these factors are also reflected in the standard of living of ordinary citizens.

External influence

It also plays an important role. The external causes of the cyclical development of the economy include:

• Hostilities. During an armed conflict, the economy is being rebuilt on a new "wave" - ​​the release of ammunition and equipment for fighters. Additional labor and resources are attracted. When the war ends, recession sets in.
• Innovation. They have a huge impact on prices, investment, demand and consumption.
• Influence of other factors. For example, this can include jumps in world oil prices.

Economic developments may include the international policy pursued by the government, as well as the diplomatic relations of the state and its activity in the world market. The combination of internal causes and stimuli from the outside forms the atmosphere in which the economy is located, they also directly proportionally affect its level and quality component. It is clear that the cyclicality of the economy is "entangled" in this complex process and is completely dependent on it.

Economy and war

A political coup, a civil confrontation or another country's invasion of the territory of a power - all this invariably leads to human, humanitarian and economic losses. Armed conflicts broke more than one economy for many millennia, but the 20th century turned out to be the most large-scale and destructive. Two World Wars and one Civil War shook more than one state: many people died, factories and factories were destroyed by explosions. Citizens suffered from hunger and lack of shelter over their heads, as all forces were thrown into the production of shells, tanks and machine guns.

War and economics are incompatible concepts. The crushing blow of the first destroys all the achievements of the second. There is no example in world history when, being in a state of armed conflict, the state would support the economy on high level and didn't need anything. At the same time, it is civil wars that are especially dangerous: they are more cruel and destructive not only for the economy, but also for the people themselves. When a brother with weapons in his hands goes against his brother, this is accompanied by especially pronounced aggression and hatred, which directly affects the level of destruction, including economic ones.

Libya example

Let us analyze how the war affected the life of Libya. The armed conflict in this country has been going on since 2011: between the followers of the murdered leader of the state Muammar Gaddafi and the detachments of the National Transitional Council. During the confrontation over the past four years, 50,000 people have died, and there have been 10 times more refugees. The numbers continue to grow rapidly. Estimates of the economic damage vary: the IMF says $7.7 billion, some consulting firms insist on $15 billion. Oil industry, which prospered and was the main breadwinner of the people, lost 50 billion.

Since the external causes of the cyclical development of the economy are primarily wars, it can be concluded how this factor influenced the situation in this case. With the development of mass protests, forceful seizures of enterprises, armed massacres and bombings, the economy fell to the very bottom of its development. The economy has actually stopped: people have lost interest in production, now their main goal is to get the truth and survive.

The role of black gold

The external causes of the cyclical development of the economy include the so-called oil shocks - jumps product prices. For example, in 1973, the unification of states that are suppliers of black gold on the world market into one OPEC cartel led to an increase in the cost of the resource. This marked the beginning of the largest in the post-war period. In the US, the decline in production continued for two years and amounted to as much as 5%.

OPEC includes Qatar, Kuwait, Libya, Syria, Saudi Arabia, Algeria, Iraq, Egypt, Arabia and Abu Dhabi. At the general council, they decided to cut fuel supplies to states that support Israel's policy. In addition to America, the list also includes Japan and most countries of Western Europe. The economies of the leading powers of the world, which depended on black gold, became depressed, because the price per barrel rose from 2-3 dollars to 15. This was the first time in history that oil weapons were used for political purposes.

Innovation

The cyclical nature of the development of the economy is also manifested when scientists invent something new, large-scale and functional. This, on the contrary, has a positive effect on production, increases it, improves the quality of goods, and so on. Sometimes innovative solutions just turn the economy on its head. For example, such a "bomb" was the construction of the world's first railway. How many opportunities for the economy opened the invention. Now it was possible to deliver goods in the shortest possible time for a thousand miles. Production has increased. People got a lot of jobs: on the railway itself, as well as in factories that began to open en masse in all world powers.

As you can see, all innovations are among the external causes of the cyclical development of the economy. If a new technique is invented, it makes it possible to increase investments, a lot of capital goods. Prosperity, however, will not be the direct result of a single discovery. It is a consequence of the whole mechanism of innovations, which, within the framework of the current cycle, lead the economy to its maximum peak of development.

The economy is not static. She, like a living being, is constantly changing. The level of production and employment of the population is changing, demand is growing and falling, prices for goods are rising, stock indices. Everything is in a state of dynamics, eternal circulation, periodic fall and growth. Such periodic fluctuations are called business or business cycle. The cyclical nature of the economy is characteristic of any country with a market type of management. Business cycles are an inevitable and necessary element in the development of the world economy.

Business cycle: concept, causes and phases

(economic cycle) is a periodically repeating fluctuation in the level of economic activity.

Another name for the business cycle is business cycle (business cycle).

In fact, the economic cycle is an alternating rise and fall in business activity (social production) in a single state or around the world (some region).

It is worth noting that although we are talking here about the cyclical nature of the economy, in fact, these fluctuations in business activity are irregular and poorly predictable. Therefore, the word "cycle" is rather conditional.

Reasons for business cycles:

• economic shocks (impulse effects on the economy): technological breakthroughs, the discovery of new energy sources, wars;
• unplanned increase in stocks of raw materials and goods, investments in fixed assets;
• changes in prices for raw materials;
• the seasonal nature of agriculture;
• struggle of trade unions for higher wages and job security.

It is customary to distinguish 4 main phases of the economic (business) cycle, they are shown in the figure below:

The main phases of the economic (business) cycle: rise, peak, recession and bottom.

Period of the economic cycle- the time interval between two identical states of business activity (peaks or bottoms).

It should be noted that, despite the cyclical nature of GDP fluctuations, its long-term trend has upward trend. That is, the peak of the economy is also replaced by depression, but each time these points move higher and higher on the chart.

The main phases of the economic cycle :

1. Rise (revival; recovery) is the growth of production and employment of the population.

Inflation is low and demand is picking up as consumers seek to make purchases they put off during the previous crisis. Innovative projects are implemented and quickly paid off.

2. Peak- the highest point of economic growth, characterized by a maximum of business activity.

The unemployment rate is very low or virtually non-existent. Production facilities operate as efficiently as possible. Inflation usually picks up as the market becomes saturated with goods and competition increases. The payback period increases, the business takes more and more long-term loans, the possibility of repayment of which is reduced.

3. Recession (recession, crisis; recession) - a decrease in business activity, production volumes and investment levels, leading to an increase in unemployment.

There is an overproduction of goods, prices are falling sharply. As a result, the volume of production decreases, which leads to an increase in unemployment. This causes a decrease in the income of the population and, accordingly, a reduction in effective demand.

A particularly long and deep recession is called depression (depression).

The Great Depression Show

One of the most famous and longest global crises is “ The Great Depression» ( great depression) lasted about 10 years (from 1929 to 1939) and affected a number of countries: the USA, Canada, France, Great Britain, Germany and others.

In Russia, the term "Great Depression" is often used only in relation to America, whose economy was hit especially hard by this crisis in the 1930s. It was preceded by a precipitous decline in the stock price that began on October 24, 1929 ("Black Thursday").

The exact causes of the Great Depression are still a matter of debate among economists around the world.

4. Bottom (through) - the lowest point of business activity, characterized by a minimum level of production and maximum unemployment.

During this period, the surplus of goods (part of low prices, the part just deteriorates). The fall in prices stops, production volumes increase slightly, but trade is still sluggish. Therefore, capital, not finding application in the sphere of trade and production, flocks to banks. This increases the money supply and leads to lower interest rates on loans.

It is believed that the "bottom" phase usually does not last long. However, as history shows, this rule does not always work. The previously mentioned "Great Depression" lasted for 10 years (1929-1939).

Types of economic cycles

Modern economics more than 1,380 different types of business cycles are known. Most often you can find a classification according to the duration and frequency of cycles. According to it, the following types of economic cycles :

1. Short-term Kitchin cycles- Duration 2-4 years.

These cycles were discovered back in the 1920s by the English economist Joseph Kitchin. Kitchin explained such short-term fluctuations in the economy by changes in world gold reserves.

Of course, today such an explanation can no longer be considered satisfactory. Modern economists explain the existence of Kitchin cycles time lags- delays in obtaining by firms the commercial information necessary for decision-making.

For example, when the market is saturated with a product, it is necessary to reduce the volume of production. But, as a rule, such information is received by the enterprise not immediately, but with a delay. As a result, resources are wasted in vain, and a surplus of hard-to-sell goods is formed in warehouses.

2. Medium-term Juglar cycles– duration 7-10 years.

For the first time this type of economic cycles was described by the French economist Clement Juglar, after whom they were named.

If in Kitchin cycles there are fluctuations in the level of utilization of production capacities and, accordingly, in the volume of commodity stocks, then in the case of Juglar cycles, we are talking about fluctuations in the volume of investments in fixed capital.

The information lags of Kitchin cycles are supplemented by delays between making investment decisions and acquiring (creating, erecting) production capacities, as well as between a decline in demand and the liquidation of production capacities that have become redundant.

Therefore, Juglar cycles are longer than Kitchin cycles.

3. Rhythms of the Blacksmith– duration 15-20 years.

Named after the American economist and laureate Nobel Prize Simon Kuznets, who discovered them in 1930.

Kuznets attributed such cycles to demographic processes (in particular, the influx of immigrants) and changes in the construction industry. Therefore, he called them "demographic" or "building" cycles.

Today, some economists view Kuznets rhythms as "technological" cycles driven by technology upgrades.

4. Long Kondratiev waves– duration 40-60 years.

Discovered by Russian economist Nikolai Kondratiev in the 1920s.

Kondratiev cycles (K-cycles, K-waves) are explained by important discoveries in the framework of scientific and technological progress (steam engine, railways, electricity, internal combustion engine, computers) and the resulting changes in the structure of social production.

These are the 4 main types of economic cycles in terms of duration. a number of researchers distinguish two more types of larger cycles:

5. Forrester cycles- Duration 200 years.

They are explained by the change in the materials used and energy sources.

6. Toffler cycles– duration 1000-2000 years.

Due to the development of civilizations.

Basic properties of the business cycle

Economic cycles are very diverse, have different duration and nature, but most of them have common features.

Basic properties of business cycles :

1. They are inherent in all countries with a market type of economy;
2. Despite the negative consequences of crises, they are inevitable and necessary, as they stimulate the development of the economy, forcing it to ascend to ever higher levels of development;
3. In any cycle, 4 typical phases can be distinguished: rise, peak, decline, bottom;
4. Fluctuations in business activity that form a cycle are influenced by not one, but many reasons:
   - seasonal changes, etc.;
   - demographic fluctuations (for example, "demographic pits");
   - differences in the service life of fixed capital elements (equipment, transport, buildings);
   - uneven scientific and technological progress, etc.;
5. IN modern world the nature of economic cycles is changing, under the influence of the processes of globalization of the economy - in particular, the crisis in one country will inevitably affect other states of the world.

Interesting neo-Keynesian Hicks–Frisch business cycle model with strict logic.

The neo-Keynesian Hicks-Frisch business cycle model.

According to the Hicks-Frisch business cycle model, cyclical fluctuations are caused by autonomous investments, i.e. investments in new products, new technologies, etc. Autonomous investments do not depend on income growth, but rather cause it. An increase in income leads to an increase in investment, depending on the amount of income: multiplier effect - accelerator.

But economic growth cannot occur indefinitely. The growth barrier is full employment(line AA).

Since the economy has reached a state of full employment, further growth in aggregate demand does not lead to an increase in the national product. As a result, the rate of wage growth begins to outpace the rate of growth of the national product, which becomes inflation factor. Rising inflation has a negative impact on the state of the economy: the business activity of economic entities is falling, the growth of real incomes is slowing down, and then they fall.

Now the accelerator is acting in the opposite direction.

This continues until the economy hits the line BB – negative net investment(when net investment is insufficient even to replace depreciated fixed capital). Competition is intensifying, the desire to reduce production costs encourages financially stable firms to start updating fixed capital, which ensures an upsurge in the economy.

Galyautdinov R.R.

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Until now, there is no single explanation for the causes of economic cycles. There are three approaches to explaining cyclicity: exogenous, endogenous and eclectic (synthesized).

Supporters exogenous approach, they believe that the reason for the economic cycle is fluctuations in exogenous (external) factors. These include revolutions, wars, population migration, politics, powerful discoveries and inventions, discoveries of large deposits natural resources uranium, gold, oil, etc.

Supporters endogenous approaches explain the causes of the cycle by internal (endogenous) factors that give impetus to the cycle. These include investment, consumption, government spending, savings, etc.

Supporters eclectic approach that combines endogenous and exogenous approaches, they believe that fluctuations in external factors give impetus to internal ones. This could be, for example, a policy that aims to smooth out cyclicality.

Theories of external factors. The theory of external factors was founded by the English economist W. S. Jevons, who connected the 11-year cycle of changes in solar activity with the economic cycle. At the same time, he suggested limiting the consideration of the impact of solar activity to only the impact on agriculture and productivity. His son X. S. Jevons supplemented his father's teaching and extended the influence of solar activity to employment, and X. M. Mor developed the general theory of solar activity. Interestingly, this theory had its followers, despite the fact that none of the modern economists considers it serious. For example, the Japanese researcher Y. Shimanaka believes that the Kondratiev cycle is equal to five solar cycles (55 years), and the Kuznets cycle is equal to two solar cycles (22 years). Another Japanese economist S. Oji, as a result of studying the cyclical development of Japan, came to the conclusion that in the period from 1885 to 1984 there were nine industrial cycles that coincided with 11-year solar cycles.

The theory of Trotsky and modern "neo-Marxists". Independently of N. D. Kondratiev, in 1921 L. D. Trotsky put forward his own theory regarding long waves. He singled out five cycles from 1781 to 1921, with Trotsky believing that the waves are the result of the intensification of the class struggle in capitalist society and do not depend on economic factors.

monetary theory. R. F. Hayek and R. J. Hawtrey expounded the monetary theory of the cycle most fully. They believed that the cycle has a monetary nature and is a purely monetary phenomenon. During expansion, as a rule, demand increases, i.e. the velocity of circulation of money, and the money supply in circulation increases. The result of their decline is insufficient aggregate demand and, consequently, a fall in employment and production. Thus, monetarists believe that economic fluctuations cannot be caused by non-monetary factors, and the cycle is a reduced copy of deflation and inflation. There would be no cycle if it were possible money turnover stabilize, but this does not happen, because monetary system characterized by instability.

The theory of overaccumulation. Proponents of the theory of overaccumulation believe that the cause of cyclicity is a structural crisis in the economy, since the most unstable are industries that produce capital goods. In these industries, production volumes change much more than in industries related to the production of consumer goods. These fluctuations lead to the cyclical development of the market economy.

The theory of underconsumption. The Swiss economist S. Sismondi developed the theory of underconsumption. Supporters of this theory believe that crises periodically arise in a market economy as a result of a lack of consumption, caused in turn by the consequences of excessive savings, which are a consequence of uneven distribution in an income society. That is, from the point of view of representatives of the theory of underconsumption, the main reason for the cyclical development of a market economy may be the excessive polarization of classes in a capitalist society in terms of income received.

Marxist theory of the cycle. Marxists believe that the abstract or formal possibility of cyclicity under capitalism stems from the functions of money as a means of payment and a means of circulation in the event of a break in acts of purchase and sale and is already inherent in simple commodity production. However, this possibility turns into reality only in the machine period, i.e. only at a certain stage in the development of capitalism.

Economic crises are generated by the so-called basic contradiction of capitalism - the contradiction between the private capitalist method of appropriating the results of production and the social nature of this production. With the growth of productive forces and the accumulation of capital, there is an ever greater socialization of production: the centralization and concentration of capital, the emergence of large capitalist enterprises and industrial centers. Economic ties, internal and external, are expanding, public division labor. Products appear as a result of the labor of many millions of workers. But the appropriation of these products remains private capitalist.

In Marxist theory, agrarian crises are a specific manifestation of the capitalist crisis. These crises have the same common cause of their occurrence: the basic contradiction of capitalism, but differ in some features that boil down to:

• to specific pricing in the agricultural sector;
• the influence of the natural factor;
• monopoly on land as an economic object;
• lagging behind industry level of agricultural development.

In this regard, agrarian crises are of a protracted, non-periodic, long-term nature. Marxists pointed to three major agrarian crises: 1875-1896, 1920-1936, 1948-1965.

It is interesting that this problem (in relation to the developed capitalist countries) was almost not considered in the 70-80s. 20th century

Keynesian concept of the cycle. The founders of the Keynesian concept of the cycle are J. Cape, P. Samuelson, J. Hicks, E. Hansen and others. In this theory, the cycle is seen as the result of accumulation, consumption and interaction between the movement of national income. In accordance with this concept, the dynamics of effective demand, determined by the functions of capital investment and consumption, forms a cyclical process. She considers the interaction between accumulation, consumption and the level of national income in terms of stable relationships characterized by accelerator coefficients (dependence of capital investment on the growth of national income) and multiplier (dependence of the growth of national income on the growth of capital investment). The Keynesian concept contributed to the construction of a number of mathematical models of the cycle, which revealed many of the weaknesses of this concept and made it possible to clarify its individual categories.

The Keynesian theory of the cycle was the basis for the counter-cyclical state-monopoly policy, which was designed to limit demand in the phases of rising prices and growth and to expand aggregate demand during periods of crisis recessions. Monetary and budgetary policy was the main instrument of regulation in accordance with this theory. In practice, countercyclical Keynesian regulation did not eliminate the internal causes of the cyclical development of the capitalist economy, resulting in unbridled growth budget deficits. It also turned out to be fraught with serious inflationary consequences, stimulating an excessive growth in the money supply, although it contributed to some mitigation of the depth of the crisis recessions in production.

Neoclassical concept of the cycle. Representatives of this concept of the cycle believe that the cause of crises is a violation of the proportion of flow / stock. However, they believe that in reality there is no equilibrium level and, consequently, the forces of attraction that would contribute to its establishment. Neoclassicists believe that there are more important factors that cause the cyclical development of a market economy. And if there were no deviations in the level of employment from its equilibrium value, then capital accumulation would proceed evenly along them. Neoclassicals believe that employment increases with capital, unemployment decreases and therefore wages decrease. In turn, this means a decrease in the rate of return, and as a result, investment falls. This leads to a relative decrease in capital, a decrease in employment, and hence to an increase in profits and a fall in wages: the process of accumulation is gaining new strength, and so on. The reason that gives rise to the cyclical development of a market economy is the deviation from the equilibrium value of actual employment.

Neo-Keynesian theory. Representatives of the neo-Keynesian theory, as well as neoclassicists, believe that the cause of cyclical fluctuations is a violation of the stock / flow ratio. The main difference between these two approaches is that the neoclassicists recognize the movement of the flow as primary, while the neo-Keynesians assign an active role in changing this proportion to the movement of the stock.

The theory of investment in fixed assets. To explain the nature of the economic cycle, most economists adhere to the theory of investment in fixed capital, which was developed back in 1939 by P. Samuelson. In his theory, he used the multiplier-accelerator model created by him and J. Hicks. The concept of the accelerator effect is as follows. In the process of production, entrepreneurs try to maintain a certain proportion between the realized finished products and capital. This proportion at the macroeconomic level is expressed as capital/income, i.e. K/Y and is called the capital intensity ratio. Change in total income or in the volume of sales will entail a proportional change in the volume of capital. The effect of the multiplier-accelerator is to combine the effects of the accelerator and the multiplier. Let's assume that there are autonomous investments in the amount of 2 c.u., then with a multiplier equal to 3, under the influence of the multiplier effect, income increases by 6 c.u. Further, the accelerator effect comes into force, which, with a capital intensity ratio of 2, increases net investment by 12 c.u. It should be noted that the multiplier-accelerator effect also works in the opposite direction. But why is there not an explosive decrease or increase in income indefinitely? The fact is that the amount of income, or real GDP, is limited by the "floor" from below and the "ceiling" from above. The ceiling is the level of potential GDP. Gender is the amount of negative net investment equal to the amount of depreciation. The basic model of P. Samuelson consists of three levels:

Where WITH – consumption; index t- relevant period of time; WITH y is the marginal propensity to consume; Y- income; I – investments; V - accelerator; G- government spending.

The idea of ​​the model is that it demonstrates that fluctuations in fixed investment are the cause of the business cycle.

Every time crises arise, quickly manifesting their harsh character, one gets the feeling that "the devil has jumped out of the snuffbox." Meanwhile, the doctrine of N. D. Kondratiev on large cycles of the economic situation can serve as a scientifically reliable basis for predicting the time frame for the emergence of crisis phenomena and determining their essential characteristics, as well as for describing the long-term dynamics of economic processes.

Over the past 200 years, there has been practically not a single case in world economic life that would contradict the teachings of Kondratiev. The events of 2007-2008 were no exception. The economy develops unsustainably in the downward stage of the Kondratiev cycle, falling at times into deep and destructive crises. The world economy today is in the downward stage of the fifth Kondratiev cycle and, according to his teachings, at this stage, major financial shocks could be predicted with high probability.

Expert opinion

Kondratiev cycles and geopolitics

In 2008, at the dawn of the crisis, economists said that the current recession was characteristic of a market model that is cyclical in nature. They explained that the observed crisis is standard, happens every 10-12 years within the framework of the functioning of the capitalist system and will have a cleansing effect on the economy. They argued that a partial resuscitation of Keynesianism and a temporary strengthening of the role of regulators, whose activities are designed to minimize the consequences of the crisis, are necessary. After that, the economy will again enter the growth phase. Years have passed since then, the economic situation continues to deteriorate, the chosen measures do not work. Even incorrigible optimists do not promise a close way out of the crisis now.

It becomes clear that this is not a typical economic downturn, but a systemic crisis of the chosen development model. The principles of the existing system are noticeably outdated, and the mechanisms have partially exhausted their resources. Crises of this magnitude occur on longer cycles of 70–80 years and lead to a fundamental correction or even a change in the growth model. Among other things, this means that we do not have the tools to describe what is happening, just as the experience of overcoming such situations has simply never been encountered before.

There are many disorienting circumstances. First of all, it is the loss of a system for an adequate assessment of assets, resources, goods, risks, labor. The financial sector with numerous derivatives and production instruments is, as it were, a separate world, isolated from the rest of the economy. Out of the blue, there is a rapid growth of quotations, a drop in demand by a few percent causes a collapse in prices. Sometimes it even seems that supply and demand have ceased to be the determining factors in setting prices. This calls into question fundamental economic laws that have been held in place since the days of Adam Smith and David Ricciardo. The dollar is no longer drawn to the role of "last resort", and a new universal equivalent is not yet visible on the horizon. The main feeling of investors was fear. Crisis of 2007–2008 in fact, not a mortgage collapse, not a liquidity crisis, but a total crisis of confidence.

The loss of trust manifests itself not only in economic, but also in political sphere. The world's largest players cannot agree on key issues, and the parties are increasingly trying to resolve conflicts through military action. The weight of international political institutions, primarily the UN and the Security Council, has declined no less than the importance of their economic counterparts, the IMF and the World Bank. The real role of these organizations in the development and adoption of decisions is very conditional, since they do not correspond to either the time or the actual tasks. The geopolitical alignment under which these institutions were laid out half a century ago has changed dramatically.

The Cold War is over, new strong players have appeared - China, India, the economies of the Asia-Pacific region and South America. They are no longer ready to perform exclusively the functions of a production base and labor force and claim to be increasingly involved in global processes. However, the system of international law and international organizations have not been modified in accordance with the changed map of the world.

Politics and economics are essentially just formal languages ​​that describe the same process. When, in parallel, the political and economic system, it signals a coming paradigm shift. Civilization has always moved forward through creative destruction, the question is the extent of this destruction.

The natural way out of the global economic and political impasse is war. This is the easiest way to reboot the system, as has always been done in such cases. The example of the Great Depression is often cited, the victory over which was given not so much by the Keynesianism of US President Franklin Roosevelt as by the Second World War. No less significant are the European wars of the 19th century, which led to the collapse of absolutism in politics and the victory of the industrial revolution.

But although the change of world order is accompanied by wars, it is now quite difficult to imagine a big war in the civilized part of the world. And the matter is not at all in the exceptional peacefulness of the Western democracies, it's just that no one needs it. The elites have long and firmly connected with each other. Moreover, these ties are closer and stronger than those that unite the elites with the people they represent. It is simply impossible to break these relations, and most importantly, obligations.

World powers will not fight directly, but indirectly - completely. We can say that they have been fighting in Afghanistan and Iraq for so long. And earlier - in Vietnam, on the Korean Peninsula, etc. Now in the Middle and Near East the interests of many strong states - the USA, China, Great Britain, France, Russia - clashed. And if the war breaks out, sparks from this hearth will be to blame.

In the mentioned region, it is worth highlighting India and Pakistan, which have been at war over Kashmir for several decades. And at the same time they are in the nuclear club. The presence of weapons of mass destruction on the sides gives a special flavor to this conflict and greatly increases the risks. India could strike Pakistan after a series of terrorist attacks organized from outside in Mumbai in 2008 (especially given the traditionally low cost of human life in India). In Pakistan itself, a civil war continues, and nuclear weapons may actually end up (if not already) in the hands of fanatics or terrorists.

The development of the Indian-Pakistani confrontation will cause an explosive series of conflicts in the Middle and Near East. The current "Arab Spring" will seem like an easy prelude when it flares up at once in Afghanistan, Uzbekistan, Iraq, Iran, Israel, Lebanon, Syria, Turkey and unrecognized Kurdistan. In this scenario, the local use of nuclear weapons in the region is quite likely.

In the event of such a war, the Western world will not have any leverage for settlement, it will remain an observer of the consequences of its own manipulations. True, they will have to sit in anticipation of the end of the great Asian war without heat and light: the supply of energy resources from the Persian Gulf will stop for a long time, and the oil and gas resources of Russia and the North Sea may not be enough for everyone.

Meanwhile, the format of wars is changing before our eyes. Until recently, they said that tanks are no longer needed and everything is decided by drones. Now on the threshold of digital wars. A well-illustrated example is the story with Israel and Iran that happened in 2010. With a computer attack, the Israelis managed to change the rotation speed of centrifuges at the uranium enrichment plant at the nuclear power plant reactor in Bushehr, and thereby postponed the creation of a nuclear bomb by the Iranians for a couple of years. We're probably opening the door to the matrix.

But a war in one region does not at all mean a global war on the world map. A great danger, and primarily for the same Europe, is the emergence of a series of smoldering conflicts. To a careful observer, it may even seem that this ignition has already begun. If Europe does not cope with the crisis, the idea of ​​European integration will fail - the collapse of the European Union and the return to separate states will follow. And there may be many more of them than before.

In the context of an economic downturn and a qualitative decline in consumption, an increase in separatist sentiments and another round of old European conflicts are almost inevitable. The Basques, the Irish, and other rebels have calmed down in recent years only because they felt themselves to be participants in some kind of European project in which everyone will receive equal rights. If they are returned back to autonomy under mono-ethnic states, then their desire for isolation and independence will return along with this.

The resumption of the Basque, Irish, Kosovo conflicts and the Greco-Turkish war, coupled with the collapse of Belgium, the separation of Scotland, as well as riots of migrants and nationalists in the capitals, can bury old Europe.

But there are scenarios that are alternative to the military ones. The main social imperative born of the crisis is a more equitable distribution. Moreover, this request goes at all levels: from ordinary households to top managers of corporations, from socially unprotected strata to the state, from eternally starving Africa to the fattening "golden billion". Hence a certain renaissance of left-wing sentiments. But the New Left has old ideas about how to share everything.

In general, all this terminological division into left and right, liberals and conservatives is full of conventions and outdated along with all political system. World leaders meet at summits, hold talks, sign documents, from which, if anything changes, then only the amounts in their bank accounts. There are elites with their own verticals of power, officials, armies - and in parallel there are ordinary citizens. And these parallel realities are increasingly moving away from each other.

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