The Business Cycle

There are many different kinds of fluctuations in an industrial economy each of which exhibits quite separate characteristics, the most obvious being differences in periodicity. The most important of these fluctuations are, to name them after their investigators: the Kitchin cycle (3-4 years); the Juglar cycle (7-11 years); the Kuznets cycle (16-22 years); and the Kondratieff cycle (40-50 years). There is considerable statistical evidence to support the existence of the first three types of fluctuation, but the reality of the Kondratieff cycle, urged so forcibly by Schumpeter,1 is in doubt. We shall concentrate on the Juglar, i.e. the standard business cycle. But economic fluctuations before 1914 are not fully comprehensible without reference to the longer Kuznets cycles related to fluctuations in building activity, migration and capital exports —all of which were dominant features in the development of the British economy in the half-century before the First World War.