About the cycle / Contratief

 Thursday, June 5, 2014

About the cycle / Contratief



When I was in school, I used to joke around with my friends to guess the future. I predicted that my economically inferior friend would definitely get rich, but now, decades later, he runs a large business and accepts the cycle of inferiority and overcoming as fate, and friends praised my brilliant foresight and laughed. I was actually the weakest of my friends, and I became the healthiest of my friends. Of course, I didn't want to talk about anything other than health, and I laughed again.

 

 

The capitalist economic system is bound to undergo economic turmoil. A long-term perspective on all areas of politics, society, and culture, as well as the economic sphere, seems to be experiencing the regularity of the wave. The perception of freedom that suddenly spreads as authoritarian identity collapses seems strong in proportion to the degree of yearning. A society dominated by religious authority due to the development of human-centered thinking such as scientific discoveries and the Renaissance shows a rapid collapse. This seems to be an easy problem to understand, considering efforts to self-purify errors or errors in the vital human social system.

 

 

In economics, it seems very important to understand this cycle. Of course, Keynes says, it is also important to understand it with a non-macroscopic or long-term perspective that is helpful to the real economy.

 

 

After that, in 1936, Keynes tried to explain general short-term economic fluctuations and the Great Depression through a book called The General Theory of Employment, Interest, and Money. He argued that a recession could occur if the aggregate demand for goods and services decreased. Keynes has long criticized classical macroeconomic theories that can only explain the long-term effects of economic policy. A few years before publishing the General Theory, Keynes' article on classical economic theory includes the following lines.

 

 

Long-term analysis does not help us understand what is going on. Long-term analysis kills all of us. If the role of economists is to say, "The typhoon will pass and the sea will calm down in a long time" during a typhoon season, the role is too easy and useless.

 

- N. Gregory Mankiw [ESSENTIALS OF ECONOMICS] -

 

Nikolay Dmitrievich Kondratieff (1892-1938?), a famous Russian economist and statistician, says that the capitalist economic system causes a long-term wave as the mid-term wave, which goes through the four stages of recession, recovery, boom, and retrograde, is repeated about five or six times. The cause is presumed to be due to innovative technologies and inventions, and Contratieff says that the first cycle is due to the industrial revolution, the second cycle is due to the development of the steel and rail industries, and the third is due to the development of the power, automobile, and chemical industries. Contratieff helped draft the first five-year Soviet economic development plan to help the Soviet Union grow its economy, which was purged after criticizing Stalin's policy of collectivizing agriculture and the disproportionate development plan of industry and agriculture.

 

 

Contratiev, who understands the business cycle of the capitalist economic system well, may have thought that the future of excessively artificial and rigid communist economic policies is uncertain. Stalin may have been hindered by economists' assertion that political value judgment should be excluded. Contratiev's criticism seems to have been prescient given the problem of government failure, such as stagflation, in which attempts to solve the problem of market failure with the belief that the government can control the business cycle.

 

 

However, it does not seem that the 'return to the liberal economic system' that neoliberals claim is true. Political or social values are closely related to economic values, and the problem of the liberal economic system seems to be that the neoliberal economic system inherits them. In other words, I think it may be another rational cycle that the problems of the neoliberal system need to be removed and improved. Contratiev, who opposed Stalin's policy, is presumed to have not made a political value judgment on communist economic policy, but because he was concerned about the reactionary will of the rigid system.

 

 

1.Cycle exists in all fields, in all areas.

2.Cycle is the adjustment process of errors.

3. Whatever economic ideology, rigidity should be improved.

 

 

When I felt unlucky, I recalled the biblical phrase, "Those who cry today, laugh tomorrow," and I laughed thinking that the deep meaning of the cycle was alive in the Bible.