Nikolai Kondratiev was a Russian economist, who was a proponent of the New Economic Policy (NEP), which promoted small private, free market enterprises in the Soviet Union. He had proposed the theory that Western capitalist economies have long term (50 to 60 years)
cycles of boom followed by depression. These business cycles are now called
|Born:|| ||4 March 1892;|| ||Kostroma Governorate, Russian Empire|
|Died:|| ||17 September 1938;|| ||Moscow Oblast, USSR|
Kondratiev's economic cycle theory held that there were long cycles of about fifty years. In the beginning of the cycle economies produce high cost capital goods and infrastructure investments creating new employment and income and a demand for consumer goods. However, after a few decades the expected return on investment falls below the interest rate and people refuse to invest, even as overcapacity in capital goods gives rise to massive layoffs, reducing the demand for consumer goods. Unemployment and a long economic crisis ensue as economies contract. People and companies save their resources until confidence begins to return and there is an upswing into a new capital formation period, usually characterized by large scale investment in new technologies.