This paper analyses the process of economic growth, which emerges from and as a consequence of cyclical development.
In the 19th century, business cycles were not thought of as cycles at all but rather as spells of crises interrupting the smooth development of the economy. In later years, economists and non- economists alike began believing in the regularity of such crises, analyzing how they were spaced apart and associated with changing economic structures.
Schumpeter (1939) suggested that the economic development proceeds cyclically rather than evenly because innovations are not evenly distributed through time, but appear, if at all, discontinuously in groups or swarms.
Schumpeter identified the "four-phases" of a cycle. Starting from the mean, a boom is a rise which lasts until the peak is reached; a recession is the drop from the peak back to the mean; a depression is the slide from the mean down to the trough; a recovery is the rise from the trough back up to the mean. From the mean, we then move up into another boom and thus the beginning of another four-phase cycle. In a sense, any cycle of whatever duration can be described as going through these four phases - otherwise the fluctuations cannot be described as "cycles".
Empirical evidence shows that throughout the 19th Century, the price level moved backward and forward heavily while output was much less subject to fluctuations. The following four Kondratiev waves (ranging between 48-60 years) have been identified - going through four phases of boom-recession- depression-recovery : (1) The Industrial Revolution (1787-1842), (2) The Bourgeois Kondratiev (1898-1950), (3) The Neo-Mercantilist Kondratiev (1898-1950): and (4) The Fourth Kondratiev (1950- 2010).