Cyclical School

(Konjunktur school), a school in bourgeois political economy that dealt with and dominated the theory of the capitalist cycle and the crises in the first third of the 20th century. It originated as a result of the intensification of contradictions of the capitalist system, which periodically expressed themselves in destructive economic crises.

The founders of the cyclical school were W. Sombart (Germany) and G. Cassel (Sweden); it was supported by economists of various schools of bourgeois political economy (A. Spiethoff and A. Hahn of Germany, W. Ropke of Switzerland, A. Aftalion and C. Juglar of France, A. Pigou, D. Robertson, and R. Hawtrey of Great Britain, and W. Mitchell, G. H. Moore, A. Burns, and W. Persons of the USA). They were united by the idea of substituting for the theory of crises a concept that in their opinion was broader—the theory of cycles.

The theory dealt with deviations from equilibrium, concluding that the capitalist cycle was a regular alternation of crests and troughs of macroeconomic conditions, with crises as possible but not inevitable expressions of the downward trend. The cyclical school concentrated on analysis of the causes, character, and forms of cyclical fluctuations and on statistical analysis of physical and value indicators of the macroeconomic cycle. The forecasting of possible fluctuations of market trends was stressed, especially in the USA, along with the development of methods of regulating cycles.

Supporters of the cyclical school characteristically looked for the causes of the manifestation of the crises not in the contradictions of the capitalist method of production but in processes that were not dependent on this system—external or casual factors (increases in production costs in the sphere of circulation, cosmic and meteorological phenomena, psychological motives, and the like). This characteristic predetermined the weakness of the school’s theoretical analysis; the failure to forecast the Depression led to a crisis in the cyclical school in the 1930’s. In contemporary bourgeois political economy, some of the propositions of the cyclical school are used by the theoreticians of “regulated” capitalism, especially at those times when the capitalist economy is relatively stabilized.