Which Was the “Real” Kondratiev: 1925 Or 1928?

Journal of the History of Economic Thought, Volume 24, Number 4, 2002

WHICH WAS THE ``REAL’’ KONDRATIEV: 1925 OR 1928?

BY VINCENT BARNETT

It is to be regretted that Nikolai Kondratiev’s 1928 paper on long cyclesÐ ``The price dynamics of industrial and agricultural commodities: the theory of relative dynamics and conjuncture’’Ð was omitted from the Pickering and Chatto English language edition of his works published in 1998.1 This is one of the two most important papers excluded from this edition, the other being the full text of his plan for agriculture and forestry, 1924± 28.2 In response, this note discusses some modi® cations that occurred in Kondratiev’s explanation of long cycles between 1925 and 1928, and puts to rest the suggestion that these changes might have taken place as the result of political factors rather than a genuine change of mind. I also counter some of my critics who have taken issue with my presentation of Kondratiev’s conception of long cycles (most notably Jan Reijnders (2001) in this journal), and link this with a more general discussion of some of the methodological issues involved. In his introductory essay to the collected works, Andrew Tylecote suggested that Kondratiev might have changed his mind on the explanation question between 1925 and 1928Ð ``retreating to a purely economic dynamic theory’’ to explain long cycles, as Tylecote put it (Tylecote 1998, p. lxxxiii)Ð because it would ``look safer’’ to the Soviet authorities. According to Tylecote, in 1925 Kondratiev oVered a tentative endogenous theory of long cycles which integrated extra-economic circumstances and events into the explanation, namely changes in technique, wars and revolutions, new country assimilation, and changes to gold production. In 1928 Kondratiev ``retreated’’ to explaining the endogeneity of the long cycle simply by over-investment. In one of my introductory essays for the collected works, I agreed with Tylecote that Kondratiev was indeed attempting an endogenous theory of long cycles (Barnett 1998b, p.xlvii), one based on the echo-eVects of large-scale capital investment projects. However, Tylecote’s idea that a ``retreat’’ occurred over the particular type of endogenous explanation being oVered by Kondratiev between 1925 and 1928 and that this

CREES, Birmingham University. 1 See Makasheva, Samuels, and Barnett, ed. 2 The fault is not all mine, however, as when I joined the project I suggested revising the existing list of what was to be included, but this suggestion was rejected by Pickering.

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could have been due to political factors might appear at ® rst sight to be plausible, but in fact it is unlikely to be true. The idea that in the 1920s Joe Stalin avidly followed rather esoteric debates over the theoretical explanation of business cycles, checking for conformity with ``Marxist’’ concepts of capitalist development, is rather fanciful. As I have argued in my book (Barnett 1998a), Kondratiev was a threat to Stalin because he articulated a market-led industrialization strategy for the USSR and because he was an important policy advisor within the Soviet government, not because of any dispute over endogenous causes of business cycles. It is unlikely that Stalin would even have understood such diVerences. If Kondratiev considered changing any of his views between 1925 and 1928 to placate Stalin, it would have been those on peasant farmsÐ collectivization and industrialization policy. That Kondratiev held to a pro-market stance on policy issues in 1928 is ample evidence that he was not amenable to turning on any theoretical issue, at least under the level of duress that existed in the USSR in the late 1920s. In chapter ® ve of my book, which according to Jan Reijnders gave an ``Aunt Sally’’ account of long cycles, I devoted a lot of space to presenting the main elements of Kondratiev’s 1928 paper on long cycles in their own terms (Barnett 1998a, pp. 121± 27), knowing that this paper was to be excluded from the English- language collected works. Interested readers should compare for themselves this approach to that taken in 1925. In summary, Kondratiev stated that the purpose of the 1928 paper was to uncover the relative dynamics of conjuncture between industrial and agricultural prices, and distinguished between small and long cycles. He detected a reverse movement in the purchasing power of agricultural against industrial goods during most of the nineteenth century, which was explained by a lag in the decline of agricultural costs of production behind industrial. The idea of endogeneity was not explicitly mentioned. If it had been, of course, this would have been extraordinary since the concept was not introduced into Russian economics until sometime later, although this does not mean that I am suggesting that Reijnders and Tylecote are wrong to interpret Kondratiev’s work mainly in these terms. However, if Kondratiev was not forced by political circumstance to modify his position on the explanation question between 1925 and 1928, why might he have done so voluntarily? One possible answer is that the in¯ uence of the work of other economists led him in this direction. Tylecote acknowledged that the criticisms provided from within the USSR by D. I. Oparin might have had such an eVect. In chapter four of my book, which Reijnders referred to as an ``intermezzo,’’ I documented in detail the Western economists with whom Kondratiev made contact with on his trip overseas in 1924± 25 (Barnett 1998a, pp. 87± 104). In response to further exposure to Wesley Mitchell and Irving Fisher, Kondratiev might well have modi® ed his views on the explanation of long cycles, although, as a historian, I make no judgement about whether this change was a step forward or a step backward in terms of economic theory. Tylecote interpreted it as a step backward, and Reijnders might see it as such as well. They should note that whilst in jail in the 1930s, Kondratiev himself provided a list of his most important published works, which included the 1928 paper but excluded the 1925 paper.

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Some of these themes ® nd further echoes in Reijnders review of my book in this journal. In his review, Reijnders accused me of making several interpretative mistakes, the most important of these being that I failed to understand how Kondratiev’s theoretical constructs were interrelated. In fact, what I was trying to do was to provide a comprehensive and historically accurate presentation of Kondratiev’s work, keeping faith with the conceptions of the time, which Reijnders may question because it is not fully commensurate with his own interpretation which employs more recently constructed ideas. Note that I am not arguing that my presentation is correct and Reijnders’s view is false, only that several diVerent interpretations are possible depending on the particular approach being adopted, something that Reijnders doesn’t appear to contemplate. For example, Reijnders stated that Kondratiev’s real contribution was that he generalized the idea of an endogenous cyclical mechanism to economic development in the long run, ``endogenizing’’ the environmental factors. As rational reconstruction of the 1925 paper this might sound plausible, Reijnders himself providing the particular setting for how Kondratiev’s theoretical constructs are to be interrelated, but Kondratiev thought he was doing something not quite the same in the 1928 paper: analyzing branches of the economy and integrating various cycles, as I outline. This is my historical reconstruction, and it is closer to how Joseph Schumpeter interpreted Kondratiev in the 1930s, i.e., a three-cycle schema (Schumpeter 1939, vol.1, p. 169).3 Kondratiev also pointed out that his analysis of long cycles was intended to be used as an aid to economic forecasting, something that Reijnders does not acknowledge. Thus, my presentation of the 1928 paper isn’t fully commensurate with how some later long cycle theorists have interpreted Kondratiev, although the work of W. W. Rostow is perhaps closest to Kondratiev’s approach in 1928. Rostow conceived of the long cycle as a cycle of relative prices. Chris Freeman and Francisco LoucË aÄ have recently presented Kondratiev’s 1928 paper as conceiving of the long cycle as a deviation away from equilibrium relative to a moving equilibrium, or of a reversible movement within an irreversible one (Freeman and LoucË aÄ , 2000, pp. 79± 80). Again this appears enticing as rational reconstruction, but whether it is ``true’’ or not is a moot point for the historian of ideas. Whether Kondratiev’s entire contribution to business cycle theory can ever be accurately and completely represented by a single sentence, no matter how rationally it is (re)constructed, should be held in doubt. My position would be that Aunt Sally should only be rejected if she doesn’t re¯ ect what particular economists were actually doing; in some cases she might be a good (historical) representation. In the same issue of this journal that contained Reijnders review of my book, Paul Samuelson endorsed a rather worrying ``selected highlights’’ conception of the role of history, with which Reijnders (and I fear many other economists) might agree. Samuelson wrote: ``Fairness and objectivity oblige us to stress the hits and not the misses of our predecessors’’ (Samuelson 2001, p. 311). It is unclear whether by ``us’’ Samuelson meant economists or historians of economics. In reality, fairness and objectivity

3 For other examples of my historical reconstruction of the work of particular economists see Barnett (2001a, 2001b).

oblige us, as historians, to provide an accurate and truthful account of whatever speci® c economists were working on, whether it is regarded as a ``hit’’ or a ``miss’’ at any particular later date and by any particular current of economic thinking. All’s (un)well that ends (un)well? Some economists might be overheard whispering: damn those pesky historians and their insolent sidekick, relativism.

REFERENCES

Barnett, Vincent. 1998a. Kondratiev and the Dynamics of Economic Development: Long Cycles and Industrial Growth in Historical Context. London: Macmillan. Ð Ð . 1998b. ``Dating the Long Cycle Turning Points: Kondratiev and After.’’ In Natalia Makasheva, Warren J. Samuels, and Vincent Barnett, eds., The Works of Nikolai D. Kondratiev, vol.1. London: Pickering and Chatto, pp.xxxv-l. Ð Ð . 2001a. ``Calling up the Reserves: Keynes, Tugan-Baranovsky and Russian War Finance.’’ Europe-Asia Studies 53 (1): 151± 69. Ð Ð . 2001b. ``Marx, Karl Heinrich.’’ In R. J. Barry Jones, ed., Routledge Encyclopedia of Inter- national Political Economy, vol 2. London: Routledge, pp. 987± 95. Freeman, Chris and Francisco LoucË aÄ . 2000. As Time Goes By: From the Industrial Revolution to the Information Revolution. Oxford: Oxford University Press. Reijnders, Jan. 2001. ``Review of Vincent Barnett, Kondratiev and the Dynamics of Economic Develop- ment: Long Cycles and Industrial Growth in Historical Context.’’ Journal of the History of Economic Thought 23 (September): 385± 87. Samuelson, Paul. 2001. ``A Modern Post-Mortem on Bohm’s Capital Theory.’’ Journal of the History of Economic Thought 23 (September): 301± 17. Schumpeter, Joseph. 1939. Business Cycles. New York: McGraw-Hill. Tylecote, Andrew. 1998. ``Politics, Technology and Economics: Kondratiev’s Endogenous Theory of Long Waves.’’ In Natalia Makasheva, Warren J. Samuels, and Vincent Barnett, eds., The Works of Nikolai D. Kondratiev, vol.1. London: Pickering and Chatto, pp.lxxi-lxxxiii.