Nikolai Dmitrievich Kondratiev, 1892-1938?

The Soviet Russian economist, Nikolai Kondratiev (or Kondratieff), well-known for his contributions to business cycle empirics. 

Nikolai Dmitrievich Kondratiev war born in Kostroma, to a peasant family, but went on to become a student of Mikhail Tugan-Baranovsky at the University of St. Petersburg, where Kondratiev stayed on to teach.  Kondratiev became caught up in politics, and joined the  Social Revolutionary Party (SRs).  He was appointed deputy minister for food supply in the last Kerensky government in 1917.  Although initially collaborating with the Bolsheviks after the October 1917 revolution, Kondratiev was briefly arrested in 1918 for opposing their food policies. In 1919, Kondratiev moved to Moscow to teach at the Petrovskaya Agricultural Academy (now Moscow State Agricultural University), becoming full professor by 1923.  In 1920, Kondratiev founded and headed the Moscow Institute for Business Conditions (or "Conjucture Insittute").  Its initial work was dedicated to developing statistics and indicators for agricultural conditions.

Kondratiev's principal claim to fame is his identification (1925) of half-century fluctuations or "long waves" of 45 to 60 years - what would later be called "Kondratiev Cycles".  The sketch of Kondratiev's theory was first published in Russian in 1922, but his main theory was worked out in a substantial 1925 article for the Institute's journal, and followed up in a 1928 volume.  Kondratiev's work only became widely known when a German translation was was published in 1926 (partially translated to English only in 1935).

In his 1925 paper, Kondratiev examined commodity price indexes for Britain, France and the United States from the late 18th C. through 1920.  He identified three cyclical waves.  Kondratiev's first cycle began  from 1789 continued until its turning point in 1814 (peak) then declined until 1849 (trough).  The second cycle rose from there, hitting its turning point in 1873 (peak) then declined until 1896 (trough).  Kondratiev then conjectured the world was still in the middle of third cycle that began in 1896 and that 1920 was probably its peak turning point.  

While Kondratiev's focus was on prices series, he argued that real economic activity followed the same path   To get the latter, Kondratiev constructed moving averages of detrended per capita series on wages, foreign trade and bond prices (basing himself partly on the techniques of Warren M. Persons).  

Kondratiev did not limit himself to empirics, but also offered a theoretical explanation for the long cycle. He saw technological innovation and financial accumulation driving periodic great waves of capital investment.  During a downswing, there is little capital investment and existing capital goods are allowed to depreciate without replacement.  But Kondratiev proposed that pressures on profits during downswings led entrepreneurs to scramble for cost-cutting inventions and also to increased concentration of capital.  So, at the bottom of the cycle, as capital depreciation reaches its nadir, businesses have portfolios of new inventions waiting to be applied and large, accumulated liquid funds ready to finance them.  This, Kondratiev conjectured, would kick off a wave of implementation and the build-up of long-term capital projects (like canals, railroads and factories).  The upswing is thus characterized by innovation (rather than invention), and the dissipation of capital by large scale investment.  Kondratiev proposed that the large-scale changes in production techniques during the capital-building upswing would cause social upheaval, which would likely become increasingly violent, draw political attention and might even lead to wars.   In the end end, the rising cost of capital, lack of new inventions, saturation of profitable investment opportunities and social-political stresses would begin chipping away at profits and slow down the boom, culminating in a major crisis that turned the long boom into a long recession.  Then the process starts again -   inventions and accumulation in the downswings for the next twenty or so years, which would eventually feed into the innovation and financing of the upswing thereafter.

Kondratiev's theory was received with great skepticism.  Eugen Slutsky (who had joined the Conjucture Institute in 1926) criticized the method, famously showing that the moving average of a series of random numbers can exhibit cyclical patterns. But there were also serious objections to Kondratiev's assumption of the coincidence of price series and real activity. Lack of data at the time meant Kondratiev had to use short-cuts and proxies for real activity.  But empirical evidence collected since shows clearly there are long stretches of time when prices and production moved in opposite directions, thus kicking out one of the pillars Kondratiev's theory rested on.  Others pointed out that Kondratiev's long cycles are too few to confirm or disconfirm. Others note their timing coincides with big exogenous events - wars, gold rushes, imperialism - which can be (and have been) used by themselves to explain the apparent turning points and drive the swings (although Kondratiev acknowledged these big events, he insisted they were endogenous).  

From the Marxist left, Kondratiev was attacked by Leon Trotsky, who had independently developed (in 1921)  his own theory of long-term capitalist crisis in terms of stages rather than cycles.  For Trotsky, capitalism did not move in waves, but was heading relentlessly towards a final crisis and complete breakdown.  To Trotsky (and other left critics), Kondratiev seemed to be suggesting that the capitalist system was, on the whole, stable, that it survived cyclical crisis without fundamental transformation. Trotsky's own theory interpreted the various apparently cyclical phases as mere adaptations of capitalism to crisis events in the "superstructure" - in short, that the wave pattern was exogenously driven.  Trotsky  criticized Kondratiev for assuming that the crises were periodic, for ignoring or endogenizing the superstructure,  and for insisting that cyclical patterns were inherent in the capitalist system.  

The Kondratiev-Trotsky controversy brought his career to an end.  It had been going well before.  Although Kondratiev was not a Bolshevik, his quantitative skills were sought out in 1923 to develop a five year plan for Russian agriculture.  He cooperated with Bukharin and his group in the early years of the Soviet planning, and was a strong supporter of the New Economic Policy (NEP) during its heyday. But his acrimonious debate with Trotsky did him no favors - his apparent defense of the "stability" of capitalism put him suspiciously in line with revisionist thinkers. After the NEP was scrapped, Kondratiev fell with it - he was dismissed from the Moscow Institute in 1928 and his works were proscribed.  Two years later, in July 1930, Kondratiev was arrested on Stalin's orders, and sentenced  to eight years in a prison camp near Suzdal.  Although the exact fate of Kondratiev was long unknown (old books assume he had died in 1931 or thereabouts), evidence has since surfaced that he survived.  Tragically, just as his sentence was about to end, Kondratiev was executed by firing squad in September 1938.

Long cycles have never been quite accepted by mainstream economics and remain suspiciously tinged as a fringe theory attractive to outside cranks and the popular press. Nonetheless, despite the skepticism, Kondratiev was elected a fellow of the Econometric Society in 1933 (Kondratiev was already in prison by that point).   Kondratiev's ideas were famously picked up and modified by Joseph Schumpeter in 1939 (who bestowed the name "Kondratiev cycle" on the long wave).  This led to another round of debate over the existence of long waves in the 1940s.  Other economists like W.C. Mitchell, Johan Åkerman, Jan Tinbergen and W.W. Rostow have entertained long-wave empirics (but used other explanations for it). 

On the left, the long wave debate was buried after Kondratiev was proscribed in the Soviet Union.  But in the 1970s several Neo-Marxian economists - notably Ernest Mandel and David Gordon - dusted of Kondratiev's theory and tried to make it compatible with Trostky's theory of capitalist crisis.

Kondratiev's reputation has improved greatly since his formal rehabilitation by the Soviet government in 1987 and the discovery of new works he had written while in prison. These, along with new translations, were published in four monumental volumes in 1998.

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