Trend and Cycle

Steindl, Josef

Bibliographic data

Works

Document type:: Works

Collection:: Josef Steindl Collection

Title:: Trend and Cycle

Author:: Steindl, Josef

Scope:: Typoskript, Konvolut aus zwei Versionen von "Trend and Cycle", teilweise identisch, nummeriert, handschriftliche Anmerkungen und Notizen, 10 Blätter und 9 Blätter

Year of publication:: 1988

Source material date:: [vermutlich um/vor 1988]

Language:: English

Note:: Versionen einer Reihe von Entwürfen zu "Trend and Cycle". Die letzte Version wurde post mortem veröffentlicht und vermutlich 1988 verfasst. - Beilage (63 Seiten): Industrial Output Section (Division of Research and Statistics): Capacity Utilization, Manufacturing, Mining, and Utlities and Industrial Materials January 1967-December 1984 with supplementary manufacturing data, January 1948-December 1966. Revised July 1985, Washington D.C.

Topic:: Growth,cycle and stagnation

JEL Classification:: E11 [General Aggregative Models: Marxian, Sraffian, Kaleckian]; E32 [Business Fluctuations, Cycles]; E37 [Prices, Business Fluctuations, and Cycles: Forecasting and Simulation: Models and Applications]

Shelfmark:: S/M.18.1

Use and reproduction license:: In Copyright

Access:: Free access

DOI:: https://doi.org/10.48671/nls.js.AC14446050

5 of the profit margin in the same way as in the case of process innovation in a single industry I treated before. If one considers the emergence of new and the disappearance of old industries this suggests a rather simple interpretation of maturity: A new industry will experience a phase of expansion while the circle of buyers and users of the new product widens up to a practical maximum. After that is reached growth of the output declines to the level of replacement demand.There is saturation. So,even without considering the case where the product goes entirely out of use, we have a general pattern of maturity as long as we consider individual industries only. The protagonists of the "long wave" have tried to use this pattern to explain maturity for the economy as a whole. For this purpose one has to assume either the existence of a dominant industry or technique which, when it matures, drags the whole economy down in its own decline. Or else one has to assume that innovations transforming the whole economy appear in swarms so as to synchronise the life cycle of quite a number of industries which grow and decline unisono. This generalisation, in so far as one may be willing to accept it, only leads to further questions about the reasons for dominance or clustering of innovations. What is certainly true is that this type of maturity is relevant for the structural crises of important industries which become especially tragic when they are concentrated in certain regions. The question which concerns us here is whether the pattern of aggressive competition which I used in Maturity and Stagnation to describe the impact of process innovations on a single industry is still relevant in these cases of major product innovation. The answer is that all product innovations in due course lead to a succession of improvements of the production method as a natural consequence of the process of learning which proceeds as production goes on. Product innovation is followed by process innovation and a cheapening of the product which in turn permits the full exploitation of a potential market (Freeman 1982).This means that the picture which I drew of the role of aggressive competition in an industry is in principle relevant for all cases of product innovation, too.The reduction of the extra profits created by the innovation to a normal level depends on the aggressive competition of firms which are struggling for room in the market to match their capacity. The accent,however, is now strongly on the role of the new entrants which I neglected in my book . 5. What do we expect of a theory of the cycle, what is it good for? There are economists who see no^ sense in it at all because every cycle is different, and the historical individuality precludes any generalisat ions.According to another opinion , diametrically opposed to the first, the theory ought to demonstrate the instability of capitalism under all circumstances,that is, also in the absence of exogenous disturbances. But in the world as it is,and with respect to a theory which, realistically speaking, can only contain a part of this world,there exist these exogenous disturbances; for practical

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