Full text: Trend and Cycle

Anybody who writes on long term growth is in danger of taking a 
larger bite than he can chew. I want at least to reduce the risk 
by limiting myself to the demand aspects of the problem. This is 
the question which occupied Rosa Luxemburg: How can capitalism 
bent on high accumulation rates as it is find markets for its 
products? At times the question seems pointless, at other times it 
becomes so urgent that people wonder whether there is any future 
in producing more goods. 
The basis from which I start is Kalecki’s view (1943,1954,1968) on 
long run growht, on what he calls the trend. He was exceedingly 
brief on this subject, but I think that the following two 
statements contain the essence of what he wrote: 
a) A positive trend will only be generated by a continuing 
exogenous inf1uence,that is, if we exclude the influence of public 
spending and of export surplusses ,by continuing technological 
change which promises extra profits to the innovator. 
b) The exogenous influence is combined with endogenous elements 
and it is the two in their combined and mutual interaction which 
produces the trend.Kalecki in this connection speaks of a "semi- 
autonomous trend”. The endogenous element corresponds to a long 
term memory, that is to the evolution of the economy in the recent 
past ( where recent is to be understood as a series of 
years,perhaps embodying a whole trade cycle ). 
This requires a few comments: The term endogenous must be 
specified by reference to a theoretical system which embodies all 
the relations (the feedbacks or couplings) between the elements of 
the system. In the present case the system is the macroeconomic 
model of the main elements of the social accounting system such as 
investment,income, profits,wages and employment etc. More 
specifically it is the framework of Kalecki’s theory of the trade 
The essence of Kalecki’s position is that he denies the 
possibility of explaining the trend by reference to endogenous 
factors alone (see his polemic against Harrod,1962 ) but equally 
also refuses to regard it as a purely exogenous phenomenon. The 
present paper is concerned with a discussion of the two sets of 
factors and the role which the one or the other may play in the 
generation of the trend. It is thus basically no more than an 
attempt to elucidate and elaborate the broad hints which Kalecki 
has given on the subject. 
Trend and cycle. 
Trend and cycle are concepts which arise in the statistical 
analysis of time series. They are distinguished and separated ex 
post. Is there an economic meaning in these concepts which relates 
them to economic behaviour? Some such meaning is certainly 
presupposed in the theories of several authors: Kalecki’s pure 
business cycle, Harrod’s analysis of long term growth and 
cycle.The underlying economic idea seems to be this:

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