Schumpeter's business cycle theory from watching the current world economic recession

 Schumpeter's business cycle theory from watching the current world recession

Wesson
(This article had May 9, 2009
financial turmoil, the world economy is plunging into a recession. This situation needed the economic crisis of the past or the mechanism to analyze and sort out. people familiar with the current lack of effective demand led Keynesian full employment of non-equilibrium model is different from this paper attempts to Schumpeter's business cycle theory to the current world of deep economic recession do to the theory of interpretation. Section II of Schumpeter's the basic pattern of the world economy since the 20th century and its evolution since the 50s, Western countries may now be raised is in the ; Kondratieff long wave This last section, as a period of rapid growth in developing countries, in Western countries face long-term case of weak economic growth, we must change the past to rely on export-oriented national development strategies and instead adopt a enriching the people The current world economic recession deeper theoretical explanation needed
second half of 2007, the global financial crisis after another, followed the current world economic recession. It appears that this by the U.S. subprime mortgage crisis triggered by The world economic recession is still deepening, and not much sign of recovery. In the last couple of years the world financial crisis and economic recession, when some new data came out, economists and financial commentators on the economic situation to have make some immediate interpretation and judgments. However, surprising is that so far very few scholars to explore the basic theoretical work in this global financial crisis and the underlying causes of economic recession, and most people just stay in the The financial and economic crisis of some description of surface phenomena, or the survey data with some immediate timetable for the economic recovery to do arbitrary assumptions and expectations. from 1979 to 1983 recession, Western countries and the world economy has experienced over 20 years of prosperity, that people seem to forget in the early 21st century the economic recession at all, which for many people, this world-wide recession seems to be a sudden fall from the sky. In neither thinking deep theoretical explanation for the lack of cases, governments in the formulation of macroeconomic policy makers, often stop-gap measure, not only swings, lack of policy continuity, and even some confusion endless.
as Beginning of this worldwide economic recession in the U.S. subprime mortgage crisis, so far, international and domestic economics and financial media are also many financial crises from the process and its impact on the real economy to speak of this world now recession. In the phenomenon of level, the current theory and general industry consensus is reached: (1) over the U.S. financial innovation and financial liberalization led to the U.S. subprime mortgage crisis, the main reason; (2) a few years ago the United States deregulation of financial regulators and lack of supervision, moral hazard in financial markets increased, exacerbated by over-leveraged financial products, the extent of damage; (3) With the deepening financial crisis in western countries, while middle-class wealth, consumption the confidence of those who fall, consumer demand fell sharply; the other hand, business confidence index fell, credit crunch, new sources of investment dried up; end the financial crisis through two channels of investment and consumption led to the decline of the real economy. in accordance with the above-mentioned phenomenon description of this world out of recession the bane of all issues in the financial system. Now the question is: Is this really so?
in the academic community has not fully sorted out from the basic theoretical level, this global economic downturn the underlying causes of the situation, wave after wave hit the global financial crisis after another, national government policy makers have no choice, all will fall into place all invoke the face of Keynesian economic theory, have adopted an expansionary fiscal policy deficit and take the maximum extent possible to increase the monetary policy currency to use some temporary macro policy options to stimulate economic recovery. results, since 2008, governments stimulate an economic recovery take a strong medicine agent, and a more than a fierce, both short-term regardless of the validity of long-term negative effects are not considered, as long as there is little to promote economic recovery, how can the future Hongshuitaotian hell!
now, although this times and the worldwide economic recession, not a big crisis of 1929-1933 brought about the destruction of human society as tragic, but apparently has been since the last major crisis of the broadest and deepest range of time. From this point of view Compare these two global economic recession and the differences between the same, from the basic level of analysis and economic theory to sort out these two great causes and mechanism of the crisis on governments to develop appropriate strategic policy of economic recovery, is clearly necessary and must. Based on this consideration, review the major crisis of 1929-1933 a number of human intellectual master of the economic fluctuations and business cycle theory of reflection and interpretation, it seems not without lessons learned. in the economic crisis thinking and business cycle theory estate, people are more familiar with the current theory of Keynes and Friedman, but the successor of the Austrian School Rothbard (Murray N. Rothbard) and Schumpeter (Joseph A. Schumpeter, 1883 ~ 1950) of the business cycle theory , but has not given sufficient attention and importance. However, in my opinion, in the understanding and awareness of the current worldwide economic downturn in this respect, the Austrian theory of economic crisis, especially mm Schumpeter's business cycle theory, than Keynes and Friedman's crisis theory, a more thought-provoking, and there may be more explanatory power.
(b) the theoretical explanation of recession: lack of effective demand from Keynes to Schumpeter's technology

1929-1933 wave of innovation in the sudden worldwide outbreak of the Great Depression dealt a heavy blow to the Western developed economies. At that time the situation forced the Western countries economists and government officials to strive to reflect the economic predecessors theory, and hope to find That caused a major crisis in human history, the source of rare and depression from recession and rapid recovery in the policy prescription. In this case, John Maynard Keynes (Keynes, 1936) (the core idea is, through the interest rate the savings into investment and changes in wage rates by means of regulating the labor market supply and demand voluntary market mechanism does not automatically create the kind of full employment, effective demand needed, therefore, to achieve full employment The Government must abandon the traditional policy of laissez-faire in favor of active fiscal and monetary policies to ensure adequate effective demand, to motivate the economy back to full employment equilibrium. In Keynes's basic theoretical framework, the economic downturn rooted in the lack of effective demand, and effective demand is determined by people's role. Keynes further pointed out that aggregate demand is consumer demand and investment demand and the composition. people's propensity to consume is stable in the short term, but in the long term, a declining trend, the result will cause people to keep up with consumption growth in revenue growth, thus causing lack of consumer demand. Keynes also believed that the volume of investment by the interest rate and the expected marginal rate of return of capital is determined. As people on the basis of expected future earnings of capital is very fragile and will often fluctuate, which often caused by lack of investment demand. In three of insufficient effective demand led to psychological factors, Keynes also emphasized the role of the marginal efficiency of capital. He believes that in times of economic prosperity, most people are optimistic about the future earnings of capital is expected, while costs and interest rates also with the rise, then investment expansion will inevitably lead to decline in the marginal efficiency of capital and thus less attractive investment, coupled with uncertainty about the future expectations of increased wealth on the demand to hold money, these factors play a role and will lead to higher interest rates, thereby increasing the stock of future earnings drop. In this series of mechanisms and processes under the integration will eventually lead to lack of investment demand. Based on the above reasoning, Keynes thought the operation of a modern market economy itself to Ping valid potential lack of demand, as well as market economy can not run itself automatically to achieve full employment, are often caught in non-full employment equilibrium.
today read Keynes's explanation, rather than policy proposals to his lack of effective demand theory, also mainly aimed at the modern market economy in theory reveal the African cause of full employment and balanced, and not directly explain the cyclical fluctuations in the modern market economy. However, The publication of the Western governments policy makers by surprise to find a great crisis to come out from a panacea, so all the gods and prophets as Keynes Bong, in accordance with the Keynesian policy instruments on the theory of effective demand stimulus ideas have been taken to rely on government to increase fiscal deficit by printing money to invest and expand to macro policies to stimulate economic recovery. Thus, there is more than 40 years after World War II so-called br> Keynes's recession, turn on the television, read newspapers, or enter into any financial Web site, read or hear comments on financial commentators and economists, you will find if you are repeating Keynes's theory and the perspective to As Keynes's theory seems to have become economists and financial commentators themselves feel more of an observation can not remove the economic world colored contact lenses.
completely different with Keynes, Schumpeter's business cycle theory from another perspective on the modern market economy downturn provides an alternative explanation, and theoretical economists in the West had a certain impact. Schumpeter's business cycle theory, mainly from the perspective of technological innovation to explain economic fluctuations and the business cycle, the main argument is mainly concentrated in the Schumpeterian (Schumpeter, 1927; 1934; 1939) , 1942) and other text book (Schumpeter, 1986), there are also some discussions. especially the However, when this book was published in 1939, Keynes's . particularly since the 2008 advent of this global recession, the Schumpeter's business cycle theory, the appropriateness of the problem has not been noticed by the majority of economists.
according to Schumpeter's theory, market economy itself has intrinsic characteristics of boom and bust cycle, and innovative production technology and production methods change plays a paramount role. in the mode of pure theory, Schumpeter assumes that the entrepreneur's innovation is an independent endogenous factors, is caused by the modern market economy presents fundamental cause of cyclical fluctuations. In the To obtain excess profits, continue to innovate, create ; economic development (5) the organizational innovation of enterprises. Schumpeter also proposed that when the wave of innovation occurs, the community of bank credit and the demand of production will expand, causing economic expansion. According to this idea, in the , leading to economic prosperity. However, the emergence of new products and increased competition, commodity prices will also tend to decline, reducing opportunities for corporate earnings. Then, the bank credit contraction. Finally, the economic system from the boom into recession, and so on back and forth. in accordance with Schumpeter's theory, when the business cycle from business cycle to the bottom, it was also some entrepreneurs have been eliminated while others are entrepreneurs must be home business opportunities, the market is difficult to recover from the recession, or will be a long recovery process.
According to the theory of business cycles in the pure reasoning, Schumpeter proposed the business cycle that in the modern market economy in the existence of first wave . production needs and consumer demand increases, will lead to rising prices. In the case of general rise in prices, there will be many investment opportunities, and with a lot of . includes not only recession, investment activities not only tend to disappear, but will also cause some damage. to not the same impact, the economic cycle length is not the same.
on the basis of theoretical reasoning above, Schumpeter also summarized the previous discussion of the business cycle on the proposed economic development in the history of modern capitalism at the same time there are three points of business cycles, which were Kondratieff cycle (Kondreatief Circle), Zhu Guerra cycle (Juglar Circle) and Kitchin cycle (Kitchin Circle), the time roughly 60 years, respectively, 10 and 40 months. First of all, according to economist Nicholas of Russia. D. Kondratieff (Kondratiev, 1979) research, the development of capitalist economy, Schumpeter put into three long periods: (1 ) 80 years from the 18th century to the 1842 development of the industrial revolution period, in which the textile industry of era proposed, from a historical point of view, a long period in each of 6 and 18 in the short-period cycles, and modern economic growth in the economic cycle, the cycle is implemented. In this group of entrepreneurs driven by innovation cycle of the business cycle in the process of modern economic growth is along the
(c) from the wave of technological innovation and economic fluctuations in relationship to see the current world recession
Schumpeter's business cycle theory is to fully absorb and learn from their predecessors (including Marx) cyclical economic prosperity of the modern market put forward to explain the phenomenon to the theory, and apparently on the 1929 to 1933 with the Great Depression of the theoretical analysis and reflection of the scene. today's perspective, Schumpeter's reference to some of the extreme (such as ) in today's ideas, inspire people to better understand and grasp the current global economic recession because of this and future trends. from the perspective of Schumpeter's business cycle theory to look at this global mechanism of the deep recession, we will find, though field on the surface appears to be triggered by the global financial crisis bit like the world economic recession, sudden, or made thanks to the widespread, but if the reflection in the past 20 years in the world (particularly the United States and other Western countries) science and technology and economic development of the interactive process, there seems to be that in which its inner necessity. Because, whether from the Kondratieff long cycle theory and predictions from Zhu to look at Glasgow in the period since the 20th century, Western countries 80 economic evolution, will find this a worldwide recession would have happened long overdue, but in the 20th century and the turn of the 21st century world of economic globalization and the IT associated with this rapid information technology network development of interaction between the two, due to counter-cyclical monetary policy the Federal Reserve, Wall Street and financial markets in Western countries, the innovation of financial derivatives, the globalization of world economy, the division of labor, and the rapid flow of international capital factors such as cross-border delay and delay down. In fact, real economic sectors in western countries as early as the engine of growth has become weak in the late 20th century, but because of financial derivatives in these countries continue to developed countries, people are indulging in a virtual financial asset inflation caused by the fond dreams of continued prosperity. only because of U.S. subprime mortgage crisis triggered by the U.S. and other Western countries in the financial asset bubble burst, followed by financial assets deleveraging and recession in the real sector, it is now a rude awakening. From this, the United States since 2008, and some of its major Western developed countries had negative growth in the economy, but in reality is a delayed onset of economic recession Under the impact of the financial turmoil it actually took place. For this judge, we can be specific in explaining the following three aspects:
First, from the Kondratieff long cycle theory point of view, if from 80 18th century Western Europe to 1842 is the textile industry innovation cycle, from 1842 to 1897 was the steam engine, steel or railway era, from 1897 to the 20th century, 50 years of electrical, chemical and automobile industry, then the times and , then the mid-50s from the 20th century to the early 21st century is from nuclear energy, aviation and aerospace technology, and computer, IT network of the rapid development of information technology-driven economic growth era. The long wave of economic growth and can be referred to as by the to judge, the United States and other Western developed economies as early as 7-8 years ago should have adjusted a business recession. However, since July 1990 to March 1991 the United States for a brief decline in economic growth since the Since 2008, U.S. economic recession, the United States as leader of the Western developed countries but so far has been 18 years of economic growth. If not for the slight decline in 1990-1991 and the 2001 decline in U.S. short-term macro-economic growth, self- 1979 to 1983 the United States and Western countries to the economic recession since 2008 this economic recession, the entire Western world has maintained more than a quarter century of economic growth. Throughout the modern history of the world, this is a mm rare species can even say a little had appeared on the U.S. economy slowdown in economic growth to near-0 short-term phenomenon. At the time, in order to avoid a recession, the Fed has taken a series series of macro policies to stimulate economic growth. For example, from January 2001 to June 2003 U.S. federal funds rate 13 consecutive times lower, down from 6.5% to 1% of the historically low levels. To some extent these measures slow the decline of the U.S. economy. the Federal Reserve to stimulate the result of macroeconomic policies, the United States the real estate market continues to boom, house prices rise, asset prices have also inflated. Meanwhile, the U.S. housing mortgage loans in the banking industry on a variety of financial products, derivatives in the continuous consumer demand. As a result, the past 20 years, the U.S. average annual growth rate of real consumer demand as high as 3.5% (see Chen Jiyong, etc., 2009, page 74). It is a combination of the above factors, delaying the United States and schedule of economic recession in Western countries.
Second, since the 20th century, 80 years, with computer technology and IT network information technology, the rapid development of world economy globalization accelerating, so that the early 21st century, countries in the world to varying degrees, into the manufacturing and the globalization of production and consumption of division of labor among the world's financial system while the process of globalization along with the rapid development of IT and network technology accelerated. in this global financial system , manufacturing and production and consumption in the global division of labor, the United States on its own well-developed financial market system, relatively complete legal system, and the division of labor in the global science and technology in the leading position in leading the global high-tech development, on their own normative standards in science and technology, intellectual property, marketing channels, pricing of financial assets and other aspects of dominant position, on the one hand the domestic manufacturing assets in the expansion of the illusion of wealth, on the other hand rely on division of labor in a globalized world the supremacy of the system to a large number of imports from East Asia and emerging market economies and cheap goods. The result of the U.S. current account deficit over the years there have been massive. In this pattern, the huge U.S. oil-exporting countries and East Asian economies have accumulated huge trade surplus as large dollar down and back into the United States, the United States over the years to fill the high-consumption, low savings gap, supporting the financial sector in recent years the United States and other in fact, have been postponed to early in the 21st century, the United States should occur recession.
Finally, in the past 20 years, driven by the expansion of financial assets, the U.S. economy After the reforms of the real sector growth. In the past 20 years, the tide of world economic globalization, a large number of foreign investment and manufacturing of new technologies into the process of reform and opening up of China. inflow of foreign capital and the introduction of new manufacturing technologies, China's abundant low-cost labor with the endowment, in the global division of labor system, on the natural formation of a Chinese export-oriented economic growth. China, this growth pattern, but also with previous years, U.S. financial markets virtual prosperity and complementary asset bubble, so the Americans on the one hand to be in the virtual economy under the conditions of prosperity, from China and other developing countries to enjoy the cheap imported goods, on the other hand can also rely on international capital inflows to lack of domestic savings to make up for the financial support of the U.S. government financing constraints and the shortage of large enterprises may have constrained economic growth. In such a technology research and development and manufacturing division of labor, division of the globalization of production and consumption, and global flows of financial capital in the world system , China, India, Southeast Asia and emerging market economies from the United States and other developed countries thanks to the third technological revolution, the introduction of the results (which in Schumpeter's theory of meaning in the business cycle is actually a global scale technology delayed in the overall global division of labor on the other end of the chain's U.S. and other Western countries in the long-overdue recession happen. In this sense, China and other developing countries and some emerging market economies is The third technological revolution process, the Economic Community of Eastern and Western countries continued to grow, and thus give a false impression most people in the world today: economic growth in the business cycle problem does not exist, all of the past economic cycle theory seems all out of date. just After the second half of 2006, by the U.S. subprime mortgage crisis has triggered waves of the global financial crisis from occurring, Western countries began to grow the real sector exposed the problem of inadequate power, as well as to present people seem to realize a dream Chu Xing, aware of the global economic downturn and suddenly seemed to come back, the last business cycle theory industry is not out of date, but also to crack down on people's confidence is so heavy. However, if Schumpeter's business cycle theory from a particular mm is the Kondratieff cycle theory mm long look at the current view of this global recession, everything seemed to be a natural and inevitable in the development process, it would seem that nothing is difficult to understand the. < br> From the above perspective to analyze the causes of global economic recession, we can for some people, the market allocation of economic resources as well as accusations of suspected critics make some response. At first glance some of the leftists to the to be the financial crisis caused by the global economic recession said to be free market theory defeat, and thus worldwide government interventionist ideas and policy options directed current can be described as even the clamor the dust. However, from the history of human society development process point of view, both in the East or West, whether in ancient or modern, almost all of the historical data show that, any government intervention in the economy and even the abolition of a large number, to resist and even where the performance of its long-term economic development are poor. This one is a very important example is the reform and opening up of China since 1978, rapid economic growth. In the past 30 years, the Chinese economy has achieved almost unprecedented in human history rapid growth, the most fundamental reason is that in the process of China's reform and opening up gradually introduced market mechanisms. Of course, the market in a way that the eyes of Hayek as a spontaneous expansion of order m is not a panacea it in their own development process will lead to various problems, and in accordance with Schumpeter's theory, the market economy is always the wave of technological innovation with the cyclical boom and bust fluctuations. However, as We can not expand in a market economy and growth in the spontaneous problem suspected human society, the market mechanism is the most effective allocation of resources the same way, we can not because the U.S. subprime mortgage crisis exposed the over-leveraged U.S. financial markets caused by the financial crisis of to suspected or negate the overall progress of financial innovation, the role and significance. the operation of a modern market economy, of course, can not do without government regulation; However, the Government using its macro-policy instruments and regulatory intervention in the economy, but also the inevitable limitations of the same and negative effects. As a major contemporary Austrian economist Rothbard (Rothbard, 1963) his way to plan, to arrange, to intervene to stimulate the economy will slow even in the short-term economic recession, when the factors that lead to economic recession, have piled up at the right time, when the crisis erupted, the economy will fall deeper and ruinous will be greater, the road to recovery will be longer. In sum, if the government market intervention and direct control over, and even the Government itself has become a society of wealth and control of the largest owners, from the long term, the results will be worse.
since the financial crisis, developed countries have a large number of financial assets shrink, many countries have experienced negative economic growth, and many companies closed down, the factory closed, a large number of employees and workers, the unemployed, and many new entrants the job market can not find work, even some people were forced to auction their own property, this is the financial and economic crisis has brought to people's misfortune and disaster. So far, the world's worst case of economic recession is not over yet , how long the crisis will continue, when will ...