Economic cycles

Important. Economic crises in Antiquity and speculative bubbles

• Crisis in Antiquity.
• These crises were not similar to those of our time.
• They had causes external to the economy and easily identifiable.
• Climate variations, bad harvests, epidemics, plagues, wars, political or social conflicts, etc.
• More rarely, also bad economic policies.
• They were isolated incidents .
• In time : they were punctual, they were not periodic, not even recurring, they did not follow a cycle.
• In space : they were located in a certain geographical area, they were not usually general except for those due to climatic variations.
• From 1600 onwards, several speculative bubbles and panics developed.
• For example: tulip mania , the South Sea bubble, or the Mississippi Company.
• They were different from the crises of antiquity, in that they were caused by internal speculations within the economy, not by external causes.
• But they were still isolated phenomena (in time and space) , they are not like the modern cycle.

Crisis in Antiquity: Seven Years of Poverty and Seven Years of Famine

Genesis 41, https://www.bibliatodo.com/la-biblia/Biblia-de-Jerusalen/genesis-41

�17. And Pharaoh told Joseph his dream: “I was standing on the bank of the river,

18. when suddenly seven sleek and beautiful cows came up from the river, which were grazing in the reedbed.

19. But behold, seven other cows came up after them, very wretched, ugly, and sickly, such as I had never seen in all the land of Egypt, so bad.

20. And the seven lean and bad cows ate the first seven sleek cows.

21. But once they had them inside, it was unrecognizable that they had them, for their appearance remained as bad as at the beginning. Then I woke up,

22. And I saw again in a dream how seven ears of grain, full and good, grew on a single stalk.

23. But behold, seven other ears of grain, dry, thin, and scorched, sprouted up after those.

24. And the thin ears of grain consumed the seven good ears. I told the magicians, but there is no one who can explain it to me.”

25. Joseph said to Pharaoh, “Pharaoh has one dream: God announces to Pharaoh what he is going to do.

26. The seven good cows are seven years of abundance, and the seven good ears of grain are seven years: for the dream is one.

27. And the seven lean and bad cows that came up after them are seven years; and likewise the seven thin and withered ears of grain are seven years of famine.

28. This is what I have said to Pharaoh. What God is going to do, he has shown to Pharaoh.

29. Behold, seven years of great abundance are coming throughout all Egypt.

30. But after that, seven more years of famine will come, and all the abundance in Egypt will be forgotten, for famine will ravage the land.

31. And there will be no satiety in the land, because of the great famine that will be.

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Crisis in Antiquity: �Diocletian's Decree on Maximum Prices

“The Edict failed to achieve its objective of halting inflation, as the mass production of low-value coins continued to devalue the currency and drive up prices, rendering the Edict's price ceilings too low. Merchants either stopped trading certain goods, sold them illegally, or resorted to barter. The Edict thus disrupted the exchange of goods and trade, particularly at the mercantile level. In some cases, entire cities could no longer afford to trade. Furthermore, because the Edict also fixed wages, many salaried workers, especially soldiers, found their money losing purchasing power, as the artificially inflated prices no longer reflected real costs. Some authors, such as Edward Gibbon, identify the Edict as one of the economic causes of the fall of the Western Roman Empire.”

https://es.wikipedia.org/wiki/Edicto_sobre_Precios_M%C3%A1ximos

Economic bubbles: Tulip mania

“In the 1620s, the price of tulips began to rise rapidly. Records survive of absurd sales: luxurious mansions exchanged for a single bulb, or flowers sold for fifteen years' wages of a well-paid craftsman. By 1623, a single bulb could fetch up to 1,000 Dutch guilders: the average annual income in the Netherlands was around 150 guilders. During the 1630s, the price of bulbs seemed to grow without limit, and the entire country invested everything they had in the speculative tulip trade. Profits reached 500%.”

In 1635, 40 bulbs were sold for 100,000 florins. For comparison, a ton of butter cost 100 florins, and eight pigs, 240 florins. A single tulip bulb was once sold for the equivalent of 24 tons of wheat. The record price was set by the Semper Augustus : 6,000 florins for a single bulb, in Haarlem.

In 1636, a bubonic plague epidemic decimated the Dutch population. The resulting labor shortage further drove up prices, creating an irresistible bull market. Such was the frenzy that a futures market emerged, based on bulbs that had not yet been harvested. This phenomenon, known as windhandel ('air trade'), became particularly popular in the taverns of small towns, despite a 1610 state edict prohibiting the trade due to the contractual difficulties it created. Despite the prohibition, such transactions continued among private individuals. Buyers went into debt and took out mortgages to acquire the flowers, and at one point, the exchange of bulbs became nothing more than genuine financial speculation using promissory notes. Extensive and beautifully produced sales catalogs were published, and tulips were even listed on the stock exchange. All social classes, from the upper bourgeoisie to the artisans, were involved in the phenomenon, where red tulips were more valuable than yellow ones.

On February 5, 1637, a lot of 99 extremely rare tulip bulbs sold for 90,000 guilders: it was the last great tulip sale. The following day, a half-kilogram lot was put up for sale for 1,250 guilders, but no buyer was found. Then the bubble burst. Prices began to plummet, and there was no way to recoup the investment: everyone was selling, and no one was buying. Enormous debts had been incurred to buy flowers that were now worthless. Bankruptcies followed, affecting all social classes. The lack of guarantees in this peculiar financial market, the inability to honor contracts, and the ensuing panic led the Dutch economy to collapse.

https://es.wikipedia.org/wiki/Tulipoman%C3%ADa

A tulip , known as " the Viceroy " ( viseroij ), displayed in the 1637 Dutch catalog Verzameling van een Meenigte Tulipaanen . Its bulb was offered for sale for between 3,000 and 4,200 guilders ( florins ) depending on weight ( gewooge ). A skilled craftsworker at the time earned about 300 guilders a year .

Economic bubbles: Newton's downfall

• BBC: How Isaac Newton, despite being a genius, lost millions on the stock market betting on making a fortune in Latin America, https://www.bbc.com/mundo/noticias-42085076 .
• “I can calculate the movement of the stars, but not the madness of men.”

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Important. The modern economic cycle

• The modern cycle is different from the crises of Antiquity or from bubbles.
• The boom follows the crisis and the crisis follows the boom; it is not a crisis or an isolated speculation in time, it is a cycle.
• The cycle is approximately periodic.
• Each cycle is similar to the others.
• It has no identifiable external cause (although one is often claimed to have one).
• It has become widespread, so that since the late 19th century it has affected all the world's major economies almost simultaneously. These are not isolated crises, like those of the past.
• We will distinguish four stages:
• Before the Industrial Revolution: stable system, crises are due to external impacts.
• From 1825 to World War II: modern cycles.
• From World War II until 1973: a period of relative stability.
• From 1973 to today: modern cycles.
• Based on Tugan- Baranovsky's work, we can date the crises in England to 1825, 1836, 1847, 1857, 1866, 1873, 1882, 1891, 1900, and 1907. See the website https://web.archive.org/web/20121226141112/http://www.ucm.es/info/bas/es/tugan/ for more information on industrial crises in England.
• For the US we will continue this sequence with 1914, 1921, 1929, 1937, interval without defined cycles, 1973, 1981, 1990, 2000 and 2008.

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Marx and Engels on the modern cycle

“The superficiality of political economy is evident, among other things, in the fact that it transforms the expansion and contraction of credit, a mere symptom of the alternating periods of the industrial cycle, into the cause of those periods. Just as celestial bodies, once set in motion, always repeat it, so too does social production as soon as it is launched into this movement of alternating expansion and contraction. The effects, in turn, become causes, and the alternations of the entire process, which always reproduces its own conditions, take the form of periodicity.”

“But only from the time when mechanical industry, having taken firm root, exerts a preponderant influence over all national production; when, thanks to it, foreign trade begins to prevail over domestic trade; when the universal market successively annexes vast territories in the New World, Asia, and Australia; when, finally, the industrial nations entering the fray are sufficiently numerous—only then, from that time onward, do the revival cycles begin, whose successive phases span entire years and always culminate in a general crisis, the end of one cycle and the starting point of another. To date, the periodic duration of these cycles is ten or eleven years, but there is no reason to consider this figure constant. On the contrary, from the laws of capitalist production, as we have just analyzed them, it must be inferred that this figure is variable and that the period of the cycles will gradually shorten.”

Marx, Capital I, Siglo XXI, page 788. �https://archive.org/details/ElCapital.LibroPrimerovol.1K.Marx �https://archive.org/details/elcapital.libroprimerovol.2k.marx �https://archive.org/details/elcapital.libroprimerovol.3k.marx

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“Indeed, since 1825, the year the first general crisis erupted, not ten consecutive years have passed without the entire industrial and commercial world, the production and exchange of all civilized nations and their retinue of more or less barbaric countries, being thrown into turmoil. Trade grinds to a halt, markets are oversaturated with goods, products stagnate in overcrowded warehouses, unable to find a market; hard currency becomes invisible; credit vanishes; factories shut down; the working masses lack the means of subsistence precisely because they have overproduced them; bankruptcies and liquidations follow one after another. Stagnation lasts for years on end; productive forces and products are squandered and destroyed en masse, until, at last, the masses of accumulated goods, more or less depreciated, find an outlet, and production and exchange gradually revive. Gradually, the pace quickens, the walking becomes a trot, the industrial trot, a at a gallop and, finally, in a frenzied race, in a steeplechase of industry, commerce, credit, and speculation, to end up, after the most daring leaps, in the pit of a crash. And so, time and time again. Five times the same story has been repeated since 1825, and at this moment (1877) we are living through it for the sixth time. And the character of these crises is so clear and so pronounced that Fourier encompassed them all when he described the first one, saying that it was a crisis pléthorique , a crisis born of superabundance.

In crises, the contradiction between social production and capitalist appropriation erupts in violent explosions. The circulation of commodities is, for the moment, paralyzed. The medium of circulation, money, becomes an obstacle to circulation; all the laws of the production and circulation of commodities are turned upside down. The economic conflict reaches its peak: the mode of production rebels against the mode of exchange.

Engels, From Utopian Socialism to Scientific Socialism , page 149. �https://web.archive.org/web/20171214182801/http://webs.ucm.es/info/bas/es/marx-eng/80dsusc/index.htm

Economic cycles: Unemployment rate in the United Kingdom (1862-1973)

Richard G. Lipsey: An introduction to positive economics , 4th ed. 1975, page 546 https://archive.org/details/introductiontopo0000lips/page/546/mode/2up

“Figure 39.1 shows a time series of the unemployment rate in the UK labor force from 1862 to 1973. Cyclical fluctuations are immediately apparent. In the nineteenth century, there was a fairly regular cycle, of varying amplitude, but lasting eight to ten years. The level of unemployment varied continuously; there were no prolonged periods of full employment or high unemployment. Here we find a regularity in the data that requires explanation. The student should immediately ask: Why did the economy exhibit such fluctuations?” (page 545; page 610 of the 1977 Spanish edition)

Economic cycles: Unemployment rate in the United Kingdom (1862-2016)

A Millennium of Macroeconomic Data for the UK – Bank of England, https://fred.stlouisfed.org/series/UNRTUKA# �The series begins earlier, but the data is not very reliable; from 1862 onwards, it is drawn from the unemployed among union members. Whenever possible, one should always try to ascertain the source and reliability of the data.

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Economic cycles: Number of unemployed in the U.S. (1948-2024)

US Bureau of Economic Analysis, https://fred.stlouisfed.org/series/LNU03000000#

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Economic cycles: Real GDP �in the USA (1948-2023)

US Bureau of Economic Analysis, https://fred.stlouisfed.org/series/GDPC1# �

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Theories about cycles

Important. Types of cycles described

• Short cycles or Kitchin cycles , 3 to 5 years; inventory?
• Juglar's medium cycles, 7 to 11 years, fixed capital?
• Des Crises commerciales et leur retour périodique en France, en Angleterre, et aux États-Unis , 1862, https://gallica.bnf.fr/ark:/12148/bpt6k1060720
• Marx, decennial cycles.
• Kuznets middle cycles, 15 to 25 years, infrastructure?
• Long or Kondratiev cycles , 50 to 60 years, technology?, https://es.wikipedia.org/wiki/Onda_de_Kondr%C3%A1tiev
• Suggested by Engels, Volume III of Capital: 1815-1847, with frequent crises; 1847-1867, with sustained development and lasting booms; and 1867-1894, with frequent crises and severe depressions; foreseeing on the one hand that the crises would be softened for a period and for the same reason there would then be a depressive period.
• Parvus , Van Gelderen , Kautsky .

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• There is only strong evidence in the case of Juglar. The others are more doubtful and disputed.
• See Schumpeter, Business cycles https://archive.org/details/businesscycles0001schu , https://archive.org/details/businesscycles0002schu
• Other cycles have been suggested. The most interesting is Condorcet's demographic cycle, which would encompass two reproductive periods, about 50 years. See Sketch of a Historical Picture of the Progress of the Human Mind , page 237, https://archive.org/details/condorcet.-sketch-of-a-historical-picture-of-the-progress-of-the-human-mind-ocr-1980

Multiple theories of the business cycle

• Numerous theories have been proposed about the cycle, and there is no consensus on them. We use a somewhat vague classification because some authors are difficult to categorize.
• Exogenous theories ; external impacts.
• Astronomical cycles
• Herschel, Jevons: solar cycle.
• Monetary-credit theories
• Hayek, Mises, Austrians: artificial expansion of credit.
• Hawtrey , credit instability.
• Psychological theories, Mills, Pigou
• Political cycles.
• Endogenous theories
• Marx, systemic theory of the cycle.
• Subconsumers , Sismondi , Owen.
• Disproportionalists .
• Financiers, Minsky.
• Random impacts, Slutzky , Frisch
• Keynes, variations in the marginal efficiency of capital.
• Schumpeter, tricyclic, innovation.
• Real cycle, Kydland and Prescott, real technological shocks.
• To give an idea of the wide variety of ideas about the cycle, we have included a chronological table (with inevitably many omissions) from https://www.academia.edu/40235211/TEOR%C3%8DAS_DEL_CICLO_ECON%C3%93MICO

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Exogenous theories of the business cycle. Jevons

• Commercial Crises and Sun-Spots , https://www.nature.com/articles/019033d0
• The sunspot cycle has a period equal to that of the crises
• I thought the crisis cycle had a period of 10.5 years, like that of sunspots.
• Later, astronomers fixed the sunspot cycle at 11.4 years, and furthermore, the crises decreased their period.
• The solar cycle impacts the climate, the climate impacts agriculture, and agriculture impacts the rest of the economy.
• From our point of view, the periods do not correspond and the cycle should also be observed in antiquity, even more strongly since it depended more on agriculture then.

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https://www.elmundo.es/ciencia-y-salud/ciencia/2018/03/07/5a9eb845e2704e187d8b463c.html

Exogenous theories of the business cycle. �The Austrian school

• Ludwig von Mises,
• The Theory of Money and Credit, https://mises.org/library/theory-money-and-credit
• Human Action , https://mises.org/library/human-action-0
• F.A. Hayek,
• Prices and Production , https://mises.org/library/prices-and-production-and-other-works
• Murray Rothbard
• America's Great Depression , https://mises.org/library/americas-great-depression
• General ideas:
• Due to state policies (central banks) and not private savings, there is an expansion of cheap credit, which distorts prices and reduces the interest rate.
• As a result, investment grows and is incorrectly directed towards capital goods, especially durable goods.
• But interest rates eventually return to their market level.
• When the tap of cheap credit is cut off, long-term investments that had been made at a low interest rate become unsustainable, investments are reduced and the crisis occurs.
• It is assumed that capitalism is stable, and that the cycle is a consequence of political errors unrelated to market dynamics.
• Being an exogenous theory, it cannot explain many aspects of the cycle, such as periodicity (which Jevons did try to explain), or the period of stability since World War II; it is not understood why policies caused the cycle before and after that period and not then.

Endogenous theories of the business cycle. Marx

• Marx's general ideas on the cycle and his analyses of the cycles that developed in his time are very interesting and illuminating. However, Marx did not manage to deduce a theory of the cycle from his theory of capitalism, and his work contains many overlapping and not always coherent ideas: disproportionalism , underconsumption , etc., as well as their negation. Nevertheless, we will attempt to reconstruct what we believe to be Marx's basic idea, understanding the cycle of crises through the lens of his theory of value.
• For Marx, crises are the very mode of movement of capitalism; it is the way in which allocation is established in capitalism that determines its cyclical nature . Therefore, to understand the cycle of crises, one must construct a theory of allocation and value in capitalism, rather than simply a theory of crises. The cycle of crises is to capitalism what planetary orbits are to gravity.
• In modern terms, we need to obtain the equations that describe the behavior of capitalism, and then, when we solve them, the cycle will appear as a consequence, in the same way that the orbits of the planets appear when we solve Newton's equations, which only assume the action of gravity.
• (Although Marx's theory of value is not credible, this idea is very interesting.)
• For Marx, the cycle arises because in capitalism, technical advancement kills the goose that lays the golden eggs.
• The value of the surplus is produced by human labor, and only by human labor, according to the law of an equal rate of surplus value (Ricardo); but it circulates among capitals according to the law of an equal rate of profit (Smith).
• Technological advancement in capitalism implies mechanization, the displacement of human labor by machines.
• (Increases the organic composition of capital)
• Note, I am not sure that Marx advocated the following idea: such displacement is possible even when it undermines the production of surplus value because the law of an equal rate of profit operates in the circulation of the surplus, and not only that of an equal rate of surplus value in the production of the surplus.
• Then technological progress shifts the source of surplus value, thereby decreasing the rate of profit and causing the crisis.
• (The rate of profit decreases with the organic composition of capital)
• The crisis causes a great destruction of capital, which allows the cycle to restart.
• Other ideas:
• Crises occur in modern times, not in antiquity, because that is when technological advancement is significant. Marx did not believe that the level of technology determines the cycle, but rather the rate of technological advancement.
• The cycle period is linked to the physical duration of the fixed capital.
• Optional: Concepts:
• Variable capital consists of wages, and constant capital is the rest of the capital. Surplus value is the excess in value.
• Define Rate of Capital Gains = Capital Gains / Variable Capital p' = P / V
• Define Rate of profit = Surplus value / ( Constant capital + Variable capital ) g' = P / ( C + V )
• Define Organic Composition of Capital = Constant Capital / Variable Capital o = C / V
• Therefore, Rate of profit = Rate of surplus value / ( Organic composition of capital + 1) g' = P / ( C + V ) = p' V / ( C + V ) = p' ( V / V ) / ( C / V + V / V ) = p' / ( o + 1)
• For a given rate of surplus value, if the organic composition of capital increases (if wages are a smaller proportion of capital) the rate of profit will decrease.

Similar cycles

Important. Similar cycles: Watt's regulator

• James Watt's governor (1788) attempts to control the speed of a machine by connecting a double pendulum to its axis of rotation.
• If the machine is running slowly and the rotating shaft turns slowly, the pendulum balls move only slightly apart, and the machine's feed valve (for steam, for fuel) opens further.
• If the machine is running fast and the rotating shaft is spinning quickly, the pendulum balls move far away, and the machine's feed valve opens less.
• When the machine is running slowly, the power supply is increased and the machine accelerates; and when it's running quickly, the power supply is decreased and it slows down. In this way, the controller tries to maintain a constant speed. https://www.youtube.com/shorts/C2w7A_ftnDo
• Until the mid-19th century, the regulator functioned well. From then on, the same regulator, which worked well with the old machines, began to oscillate cyclically with the new machines.
• “In the mid-19th century, machine design techniques changed and manufacturing processes improved. It was then observed that machine speeds varied cyclically over time, exhibiting unstable behavior. This problem was quite serious and attracted a large number of prominent scientists and engineers.” http://automata.cps.unizar.es/Historia/Webs/problema_de_la_estabilidad.htm �https://www.youtube.com/watch?v=UjQxyrBslnU
• Maxwell, On Governors , https://upload.wikimedia.org/wikipedia/commons/b/b1/On_Governors.pdf
• Lyapunov , Problem général de la stabilité du movement , http://www.numdam.org/article/AFST_1907_2_9__203_0.pdf

Similar cycles: thermostats

The shaded area represents the times when the heating is on, controlled by the thermostat. The thermostat tends to maintain a relatively constant temperature of around 20 degrees, but with some fluctuations.

Similar cycles: �Cepheid stars

“2.4.1. Eddington Thermodynamic Engine

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British astrophysicist Arthur Eddington proposed studying the pulsations of stars by modeling them as thermodynamic engines.

[…]

Eddington proposed treating the star's cycle as a valve. When a layer of the star is compressed, it becomes opaque and dampens the outward flow of energy. Due to this contained energy, the layer is pushed toward the surface, the density of the stellar material decreases, and energy is released. The star cools and becomes transparent, allowing the energy trapped at the beginning of the cycle to escape. The layer descends into the star's interior, where it is compressed again, and the cycle begins anew. Eddington concluded that opacity should increase with compression. It is worth noting that at the time of compression, the temperature and density near the core increase. �https://repositorio.uniandes.edu.co/server/api/core/bitstreams/f827d942-2d21-4622-89ad-409e893230bf/content

“The model of the pot for a Cepheid star.

(a) In both the model and the star, gravity and gas pressure are balanced,

(b) The lid, after starting to move, eventually stops after a few oscillations due to friction,

(c) Radiation passes through the gas in the model. If the gas absorbs more radiation in the compressed state than in the expanded state, the lid can maintain its oscillations despite friction losses.

Rudolf Kippenshaw , One Hundred Billion Suns, https://archive.org/details/CienMilMillonesDeSolesRKippenhahnSalvat1993/page/n59/mode/1up

Time lapse of the Cepheid type variable star Polaris illustrating the visual appearance of its cycle of brightness changes. https://en.wikipedia.org/wiki/Cepheid_variable �https://es.wikipedia.org/wiki/Polaris_(estrella)

Similar cycles: demographic cycles

Condorcet, Sketch of a Historical Picture of the Progress of the Human Mind , page 237, https://archive.org/details/condorcet.-bosquejo-de-un-cuadro-historico-de-los-progresos-del-espiritu-humano-ocr-1980

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Malthus, An Essay on the Principle of Population , Chapter 2, page 12, https://books.google.es/books?id=8TdB7Y3XYiAC

Similar life cycles: lemmings

https://www.youtube.com/shorts/eSwQjkXb6FM �" Despite their small size, lemmings are known for their remarkable mass migrations, where thousands of individuals move together in search of food and suitable habitats. These adorable creatures have dense fur, short tails, and rounded ears. They are herbivorous, feeding on a variety of grasses, mosses, and other vegetation. Lemmings play a crucial role in their ecosystems, serving as prey for predators like “foxes, owls, and stoats. ”

https://fr.wikipedia.org/wiki/Lemming �“ Like many rodents, their population experiences periodic peaks, forcing them to disperse across the tundra in search of food and shelter that their home territory can no longer provide. The Norwegian lemming and the brown lemming are among the most prolific rodent species in the world: as a result, their populations fluctuate chaotically rather than following a logistic function (Verhulst) or exhibiting regular cycles. It is unclear why lemming populations fluctuate so much: roughly every four years, they plummet to near extinction. �[…] Some �lemming species may disperse from their original territory when population pressure has become excessive compared to available resources (such as moose or beavers). Lemmings can swim and cross streams in search of new habitat. In these cases, some die if the effort required exceeds their physical condition. �[…] �In the 1530s, the geographer Zeigler of Strasbourg theorized that these creatures fell from the sky during snowstorms (an idea found in Norton's Detroit Inupiat /Yupik folklore ) and died with the return of spring. This idea is found in the depictions of the animal by the Swedish writer Olaus Magnus. This theory was contradicted by the naturalist Ole Worm who, while admitting that lemmings could rain down, believed they were carried by the winds rather than appearing spontaneously. Worm was the first to publish anatomical maps of lemmings , demonstrating that they were no different from other rodents, and Linnaeus's work established the natural origin of this animal.�

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Population cycles of lemmings ( Lemnus lemnus ) in Finse , Norway. Trapping was carried out in spring (S) and autumn (A). F represents the low-density phase, C the growth phase, A the abundance phase, and D the decline phase. "Am" represents the amplitude of the oscillation (about 10 lemmings per 100 night traps) and "P" the period (about 3.5 years). https://www.researchgate.net/publication/281013371_Transmission_ecology_of_parasites_viruses_nematodes_among_a_cylic_rodent_community_Consequences_for_human_public_health

Similar life cycles: hares (and lynxes)

Lynx populations depend on the natural oscillation cycle of hares, but lynx predation is probably not the main cause of hare population fluctuations , https://www.ealt.ca/blog/hare-vs-lynx-cycle#:~:text=Having%20plentiful%20prey%20species%20means,about%20once%20every%2010%20years .

Lotka -Volterra equations

https://elpais.com/ciencia/cafe-y-teoremas/2023-01-11/una-formula-para-tiburones-las-ecuaciones-que-comparten-ecologos-y-economistas.html

“In 1967, economist Richard M. Goodwin used these equations to explain economic fluctuations as a consequence of mismatches between labor and wages. Specifically, he argued that the employment rate and the cost of wages are variables that evolve cyclically […]

His mathematical model offered an interpretation of the cycles inherent in capitalism through causes endogenous to the system, without needing to resort to external shocks.”