The simple two-sector Kondratieff model developed by John Sterman has contributed significantly to our understanding of some of the basic mechanisms underlying the economic long wave. The dynamic hypothesis of this model is that the positive feed-back associated with the so-called self-ordering of capital reinforces and prolongs the characteristic expansions and contractions of the capital sector as it adjusts its capacity to the required production. It is assumed that this feed-back can be strong enough to produce a self-sustained oscillation (a limit cycle) with a period which is about twice as long as usual capital lifetimes. Concentrating on the ordering and production of capital, the Sterman model only depicts a relatively small fraction of our economic system. At least in its original version, the model doesn't deal with several of the basic phenomena involved in the verbal description of the economic long wave, as it is usually presented. There is no account of variations in employment, buying power or political attitudes, for instance, and changes in the rate of innovations are also outside the model boundary. We do not think that one can presently develop a complete and satisfactory model of the economic long wave. We have therefore adopted an alternative starting point by assuming that the alternating phases of economic expansion and stagnation arrise from the succession of technical-economic cultures each characterized by its own infrastructure, leading industrial sectors, typical production methods and main products. Even the geographical location of the dominant political-economic center may shift from wave to wave. This is Mensch's process of metamorphosis. Where the Sterman approach emphasizes the cyclic character of the wave, our model is meant to describe the qualitative changes through which one set of technologies replaces the next. In our model, the economic system has no equilibrium point to oscillate around. As long as technology develops and new discoveries are made, the potential for economic activity continues to grow. A purpose of the model is therefore to show how randomly distributed discoveries can be bunched into waves of innovations with a relatively well defined period.

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Date created

• 1984

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• Document

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• Processing documentation available at: https://wiki.albany.edu/display/SCA/Processing+Ingested+Digital+Files

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• Creative Commons BY-NC-ND Attribution-NonCommercial-NoDerivs 4.0 International

  
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6e5cbea1fd05527880f389afd8fb85d1

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Collection

System Dynamic Society Records

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Collecting area

• This collection is part of the University Archives