Long Waves and Industrial Revolutions

Piatier, A. (1984). Long Waves and Industrial Revolutions. IIASA Collaborative Paper. IIASA, Laxenburg, Austria: CP-84-054

Preview

Text CP-84-054.pdf Download (1MB) | Preview

Abstract

The microeconomic analysis of innovation allows one to identify the salient features that will be useful for explaining the course of industrial revolutions, which in turn are characterized by clusters of major innovations. Innovation is the final result of a process (research, development, experiments, implementation of a production system, manufacture, and commercialization). It constitutes an extensive range: from major innovations to the improvement of processes; from inventions that are new throughout the world to the introduction of products already manufactured elsewhere.

The establishing of the existence of long-term movements, generated by waves of innovation over a period of about two centuries in the industrialized countries, is based on the observation of three industrial revolutions during each of which innovations in the areas of energy, transport, and basic industries took place. The resulting long-term movement follows a logistic curve (from youth to maturity and thence to decline). The biological and demographic analogy is obvious (population of a space up to saturation).

The author makes the following terminological distinctions: (a) A long-term movement is the most general expression: its evolution is not continual but consists of phases of unspecified highs and lows. (b) A long-term cycle is a movement that has regularity and periodicity, with alternating phases of highs and lows. (c) "Long waves" has a less restrictive meaning and does not imply regularity in the alternation of highs and lows.

This paper deals with long waves, and has the aim of adding a number of characteristics: (a) Long waves are a succession of ascending movements having the form of logistic curves. (b) These logistic curves are separated by periods of uncertainty that more often take the form of recessions than of periods of stagnation. (c) The origin of long waves and the intervals separating them may be found in the economic mechanism itself. Thus technological progress is endogenized.

Innovations do not occur by chance, but are bunched at certain times that correspond to the decline of the preceding wave of innovations. It is at this point that the economic conditions combine to favor the onset of a new wave. Unemployed manpower and available capital will be put to work in risky ventures that did not stand the slightest chance of being undertaken whilst all industries were at the height of prosperity and were using up all available resources.

To verify this theory the author uses the tables of G. Mensch on the frequency of the appearance of innovations at times coinciding with the great crises, which are shown by the author's logistic curves. A great crisis is caused by the superposition of a logistic curve that has come to a decline upon the next one, which is still in the embryonic phase.

The small cycle is perturbed and extended at the turning point of the long wave, whilst parabolic laws determine numerous examples of transition from expansion to saturation or recession.

Actions (login required)

View Item