Economic value is a measure of the benefit provided by a good or service to an economic agent. It is measured relative to units of currency, the interpretation is therefore "what is the maximum amount of money a specific actor is willing and able to pay for the good or service"? Among the competing schools of economic theory there are differing theories of value. Economic value is not the same as market price, nor is economic value the same thing as market value. If a consumer is willing to buy a good, it implies that the customer places a higher value on the good than the market price; the difference between the value to the consumer and the market price is called "consumer surplus". It is easy to see situations where the actual value is larger than the market price: purchase of drinking water is one example; the economic value of a good or service has puzzled economists since the beginning of the discipline. First, economists tried to estimate the value of a good to an individual alone, extend that definition to goods which can be exchanged.
From this analysis came the concepts value in value in exchange. Value is linked to price through the mechanism of exchange; when an economist observes an exchange, two important value functions are revealed: those of the buyer and seller. Just as the buyer reveals what he is willing to pay for a certain amount of a good, so too does the seller reveal what it costs him to give up the good. Additional information about market value is obtained by the rate at which transactions occur, telling observers the extent to which the purchase of the good has value over time. Said another way, value is how much a desired object or condition is worth relative to other objects or conditions. Economic values are expressed as "how much" of one desirable condition or commodity will, or would be given up in exchange for some other desired condition or commodity. Among the competing schools of economic theory there are differing metrics for value assessment and the metrics are the subject of a theory of value.
Value theories are a large part of the differences and disagreements between the various schools of economic theory. In neoclassical economics, the value of an object or service is seen as nothing but the price it would bring in an open and competitive market; this is determined by the demand for the object relative to supply in a competitive market. Many neoclassical economic theories equate the value of a commodity with its price, whether the market is competitive or not; as such, everything is seen as a commodity and if there is no market to set a price there is no economic value. In classical economics, the value of an object or condition is the amount of discomfort/labor saved through the consumption or use of an object or condition. Though exchange value is recognized, economic value is not, in theory, dependent on the existence of a market and price and value are not seen as equal; this is complicated, however, by the efforts of classical economists to connect price and labor value. Karl Marx, for one, saw exchange value as the "form of appearance" of value, which implies that, although value is separate from exchange value, it is meaningless without the act of exchange, i.e. without a market.
In this tradition, Steve Keen makes the claim that "value" refers to "the innate worth of a commodity, which determines the normal ratio at which two commodities exchange." To Keen and the tradition of David Ricardo, this corresponds to the classical concept of long-run cost-determined prices, what Adam Smith called "natural prices" and Karl Marx called "prices of production." It is part of a cost-of-production theory of price. Ricardo, but not Keen, used a "labor theory of price" in which a commodity's "innate worth" was the amount of labor needed to produce it. "The value of a thing in any given time and place", according to Henry George, "is the largest amount of exertion that anyone will render in exchange for it. But as men always seek to gratify their desires with the least exertion this is the lowest amount for which a similar thing can otherwise be obtained."In another classical tradition, Marx distinguished between the "value in use", labor cost which he calls "value", "exchange value".
By most interpretations of his labor theory of value, like Ricardo, developed a "labor theory of price" where the point of analyzing value was to allow the calculation of relative prices. Others see values as part of his sociopolitical interpretation and critique of capitalism and other societies, deny that it was intended to serve as a category of economics. According to a third interpretation, Marx aimed for a theory of the dynamics of price formation, but did not complete it. In 1860, John Ruskin published a critique of the economic concept of value from a moral point of view, he entitled the volume Unto This Last, his central point was this: "It is impossible to conclude, of any given mass of acquired wealth by the fact of its existence, whether it signifies good or evil to the nation in the midst of which it exists. Its real value depends on the moral sign attached to it, just as as that of a mathematical quantity depends on the algebraic sign attached to it. Any given accumulation of commercial wealth may be indicative, on the one hand, of faithful industries, progressive energies, productive ingenuities: or, on the other, it may be indicative of mortal luxury, merciless tyranny, ruinous chicanery."
Gandhi was inspired by Ruskin's book and published a paraphrase of it in 1908. Economists su
Welfare capitalism is capitalism that includes social welfare policies. Welfare capitalism is the practice of businesses providing welfare services to their employees. Welfare capitalism in this second sense, or industrial paternalism, was centered on industries that employed skilled labor and peaked in the mid-20th century. Today, welfare capitalism is most associated with the models of capitalism found in Central Mainland and Northern Europe, such as the Nordic model, social market economy and Rhine capitalism. In some cases welfare capitalism exists within a mixed economy, but welfare states can and do exist independently of policies common to mixed economies such as state interventionism and extensive regulation. "Welfare capitalism" or "welfare corporatism" is somewhat neutral language for what, in other contexts, might be framed as "industrial paternalism", "industrial village", "company town", "representative plan", "industrial betterment", or "company union". In the 19th century, some companies—mostly manufacturers—began offering new benefits for their employees.
This began in Britain in the early 19th century and occurred in other European countries, including France and Germany. These companies sponsored sports teams, established social clubs, provided educational and cultural activities for workers; some offered housing as well. Welfare corporatism in the United States developed during the intense industrial development of 1880 to 1900, marked by labor disputes and strikes, many violent. One of the first attempts at offering philanthropic welfare to workers was made at the New Lanark mills in Scotland by the social reformer Robert Owen, he became manager and part owner of the mills in 1810, encouraged by his success in the management of cotton mills in Manchester, he hoped to conduct New Lanark on higher principles and focus less on commercial profit. The general condition of the people was unsatisfactory. Many of the workers were steeped in theft and drunkenness, other vices were common; the respectable country people refused to submit to the long hours and demoralising drudgery of the mills.
Many employers operated the truck system, whereby payment to the workers was made in part or by tokens. These tokens had no value outside the mill owner's "truck shop"; the owners were able to charge top prices. A series of "Truck Acts" stopped this abuse, by making it an offence not to pay employees in common currency. Owen opened a store where the people could buy goods of sound quality at little more than wholesale cost, he placed the sale of alcohol under strict supervision, he passed on the savings from the bulk purchase of goods to the workers. These principles became the basis for the cooperative stores in Britain that continue to trade today. Owen's schemes involved considerable expense. Tired of the restrictions on his actions, Owen bought them out in 1813. New Lanark soon became celebrated throughout Europe, with many leading royals and reformers visiting the mills, they were astonished to find a clean, healthy industrial environment with a content, vibrant workforce and a prosperous, viable business venture all rolled into one.
Owen’s philosophy was contrary to contemporary thinking, but he was able to demonstrate that it was not necessary for an industrial enterprise to treat its workers badly to be profitable. Owen was able to show visitors the village’s excellent housing and amenities, the accounts showing the profitability of the mills. Owen and the French socialist Henri de Saint-Simon were the fathers of the utopian socialist movement. Boarding houses were built near the factories for the workers' accommodation; these so-called model villages were envisioned as a self-contained community for the factory workers. Although the villages were located close to industrial sites, they were physically separated from them and consisted of high quality housing, with integrated community amenities and attractive physical environments; the first such villages were built in the late 18th century, they proliferated in England in the early 19th century with the establishment of Trowse, Norfolk in 1805 and Blaise Hamlet, Bristol in 1811.
In America, boarding houses were built for textile workers in Massachusetts in the 1820s. The motive behind these offerings was paternalistic—owners were providing for workers in ways they felt was good for them; these programs did not address the problems of long work hours, unsafe conditions, employment insecurity that plagued industrial workers during that period, however. Indeed, employers who provided housing in company towns faced resentment from workers who chafed at the control owners had over their housing and commercial opportunities. A noted example was Pullman, Illinois—a site of a strike that destroyed the town in 1894. During these years, disputes between employers and workers turned violent and led to government intervention. In the early years of the 20th century, business leaders began embracing a different approach; the Cadbury family of philanthropists and business entrepreneurs set up the model village at Bournville, England in 1879 for their chocolate making factory. Loyal and hard-working workers were treated with great respect and high wages and good working conditions.
Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Characteristics central to capitalism include private property, capital accumulation, wage labor, voluntary exchange, a price system, competitive markets. In a capitalist market economy, decision-making and investment are determined by every owner of wealth, property or production ability in financial and capital markets, whereas prices and the distribution of goods and services are determined by competition in goods and services markets. Economists, political economists and historians have adopted different perspectives in their analyses of capitalism and have recognized various forms of it in practice; these include welfare capitalism and state capitalism. Different forms of capitalism feature varying degrees of free markets, public ownership, obstacles to free competition and state-sanctioned social policies; the degree of competition in markets, the role of intervention and regulation, the scope of state ownership vary across different models of capitalism.
The extent to which different markets are free as well as the rules defining private property are matters of politics and policy. Most existing capitalist economies are mixed economies, which combine elements of free markets with state intervention and in some cases economic planning. Market economies have existed under many forms of government and in many different times and cultures. Modern capitalist societies—marked by a universalization of money-based social relations, a large and system-wide class of workers who must work for wages, a capitalist class which owns the means of production—developed in Western Europe in a process that led to the Industrial Revolution. Capitalist systems with varying degrees of direct government intervention have since become dominant in the Western world and continue to spread. Over time, capitalist countries have experienced consistent economic growth and an increase in the standard of living. Critics of capitalism argue that it establishes power in the hands of a minority capitalist class that exists through the exploitation of the majority working class and their labor.
Supporters argue that it provides better products and innovation through competition, disperses wealth to all productive people, promotes pluralism and decentralization of power, creates strong economic growth, yields productivity and prosperity that benefit society. The term "capitalist", meaning an owner of capital, appears earlier than the term "capitalism" and it dates back to the mid-17th century. "Capitalism" is derived from capital, which evolved from capitale, a late Latin word based on caput, meaning "head"—also the origin of "chattel" and "cattle" in the sense of movable property. Capitale emerged in the 12th to 13th centuries in the sense of referring to funds, stock of merchandise, sum of money or money carrying interest. By 1283, it was used in the sense of the capital assets of a trading firm and it was interchanged with a number of other words—wealth, funds, assets, property and so on; the Hollandische Mercurius uses "capitalists" in 1654 to refer to owners of capital. In French, Étienne Clavier referred to capitalistes in 1788, six years before its first recorded English usage by Arthur Young in his work Travels in France.
In his Principles of Political Economy and Taxation, David Ricardo referred to "the capitalist" many times. Samuel Taylor Coleridge, an English poet, used "capitalist" in his work Table Talk. Pierre-Joseph Proudhon used the term "capitalist" in his first work, What is Property?, to refer to the owners of capital. Benjamin Disraeli used the term "capitalist" in his 1845 work Sybil; the initial usage of the term "capitalism" in its modern sense has been attributed to Louis Blanc in 1850 and Pierre-Joseph Proudhon in 1861. Karl Marx and Friedrich Engels referred to the "capitalistic system" and to the "capitalist mode of production" in Capital; the use of the word "capitalism" in reference to an economic system appears twice in Volume I of Capital, p. 124 and in Theories of Surplus Value, tome II, p. 493. Marx did not extensively use the form capitalism, but instead those of capitalist and capitalist mode of production, which appear more than 2,600 times in the trilogy The Capital. According to the Oxford English Dictionary, the term "capitalism" first appeared in English in 1854 in the novel The Newcomes by novelist William Makepeace Thackeray, where he meant "having ownership of capital".
According to the OED, Carl Adolph Douai, a German American socialist and abolitionist, used the phrase "private capitalism" in 1863. Capitalism in its modern form can be traced to the emergence of agrarian capitalism and mercantilism in the early Renaissance, in city states like Florence. Capital has existed incipiently on a small scale for centuries in the form of merchant and lending activities and as small-scale industry with some wage labour. Simple commodity exchange and simple commodity production, which are the initial basis for the growth of capital from trade, have a long history. Classical Islam promulgated capitalist economic policies such as free banking, their use of Indo-Arabic
Social market economy
The social market economy called Rhine capitalism, is a socioeconomic model combining a free market capitalist economic system alongside social policies that establish both fair competition within the market and a welfare state. It is sometimes classified as a coordinated market economy; the social market economy was promoted and implemented in West Germany by the Christian Democratic Union under Chancellor Konrad Adenauer in 1949. Its origins can be traced to the interwar Freiburg school of economic thought; the social market economy was designed to be a third way between laissez-faire economic liberalism and socialist economics. It was inspired by ordoliberalism, social democratic ideas and the political ideology of Christian democracy, or more the tradition of Christian ethics; the social market economy refrains from attempts to plan and guide production, the workforce, or sales, but it does support planned efforts to influence the economy through the organic means of a comprehensive economic policy coupled with flexible adaptation to market studies.
Combining monetary, trade, customs and social policies as well as other measures, this type of economic policy aims to create an economy that serves the welfare and needs of the entire population, thereby fulfilling its ultimate goal. The "social" segment is wrongly confused with socialism and democratic socialism and although aspects were inspired by the latter the social market approach rejects the socialist ideas of replacing private property and markets with social ownership and economic planning; the "social" element to the model instead refers to support for the provision of equal opportunity and protection of those unable to enter the free market labor force because of old-age, disability, or unemployment. Some authors use the term "social capitalism" with the same meaning as social market economy, it is called "Rhine capitalism" when contrasting it with the Anglo-Saxon model of capitalism. Rather than see it as an antithesis, some authors describe Rhine capitalism as a successful synthesis of the Anglo-American model with social democracy.
The German model is contrasted and compared with other economic models, some of which are described as "third ways" or regional forms of capitalism, including Tony Blair's Third Way, French dirigisme, the Dutch polder model, the Nordic model, Japanese corporate capitalism and the contemporary Chinese model. A 2012 comparative politics textbook distinguishes between the "conservative-corporatist welfare state" and the "labor-led social democratic welfare state"; the concept of the model has since been expanded upon into the idea of an eco-social market economy as not only taking into account the social responsibility of humanity, but the sustainable use and protection of natural resources. Social market economies aims to combine free initiative and social welfare on the basis of a competitive economy; the social market economy is opposed to laissez-faire policies and to socialist economic systems and combines private enterprise with regulation and state intervention to establish fair competition, maintaining a balance between a high rate of economic growth, low inflation, low levels of unemployment, good working conditions, social welfare and public services.
The term "social" was established by Adenauer to prevent further reference to Christian socialism, used in the early party agenda Ahlener Programm in 1947. Although the social market economy model evolved from ordoliberalism, this concept was not identical with the conception of the Freiburg School as it emphasized the state's responsibility to improve the market condition and to pursue a social balance. In contrast to Walter Eucken, who sought an answer to the social question by establishing a functioning competitive order within a constitutional framework, Alfred Müller-Armack conceived the social market economy as a regulatory policy idea aiming to combine free enterprise with a social programme, underpinned by market economic performance. In putting social policy on par with economic policy, Müller-Armack's concept was more emphatic regarding socio-political aims than the ordoliberal economic concept; this dual principle appeared in the name of the model. Although the adjective "social" attracted criticism as a decorative fig leaf or conversely as a gateway for antiliberal interventionism, it meant more than distinguishing the concept from that of laissez-faire capitalism on the one side and of ordoliberal conceptions on the other.
In drawing on Wilhelm Röpke's anthropo-sociological approach of an economic humanism leading to a Civitas Humana, Müller-Armack pursued a "Social Humanism" or "Social Irenics"—the notion "irenics" derives from the Greek word εἰρήνη, which means being conducive to or working toward peace, moderation or conciliation—to overcome existing differences in society. Therefore, the social market economy as an extension of neoliberal thought was not a defined economic order, but a holistic conception pursuing a complete humanistic societal order as a synthesis of conflicting objectives, namely economic freedom and social security; this socio-economic imperative managed by a strong state—in contrast to the ordoliberal minimal state safeguarding the economic order—is labelled by the ambiguous but historical term Der Dritte Weg. The concept of the social market economy received fundamental impulses from reflection and critique of historical economic and social orders, namely Smithian laissez-faire liberalism on the one hand and Marxian socialism on the other.
Furthermore, various Third Way conceptions prepared the g
Economic interventionism is an economic policy perspective favoring government intervention in the market process to correct the market failures and promote the general welfare of the people. An economic intervention is an action taken by a government or international institution in a market economy in an effort to impact the economy beyond the basic regulation of fraud and enforcement of contracts and provision of public goods. Economic intervention can be aimed at a variety of political or economic objectives, such as promoting economic growth, increasing employment, raising wages, raising or reducing prices, promoting income equality, managing the money supply and interest rates, increasing profits, or addressing market failures; the term intervention assumes on a philosophical level that the state and economy should be inherently separated from each other. The term intervention is used by advocates of laissez-faire and free markets. Capitalist market economies that feature high degrees of state intervention are referred to as mixed economies.
Liberals and other advocates of free market or laissez-faire economics view government interventions as harmful due to the law of unintended consequences, belief in government's inability to manage economic concerns and other considerations. However, modern liberals and contemporary social democrats are inclined to support interventionism, seeing state economic interventions as an important means of promoting greater income equality and social welfare. Furthermore, many center-right groups such as Gaullists, paternalistic conservatives and Christian democrats support state economic interventionism to promote social order and stability. National-conservatives frequently support economic interventionism as a means of protecting the power and wealth of a country or its people via advantages granted to industries seen as nationally vital; such government interventions are undertaken when potential benefits outweigh the external costs. On the other hand, Marxists feel that government welfare programs might interfere with the goal of overthrowing capitalism and replacing it with socialism because a welfare state makes capitalism more tolerable to the average worker.
Socialist]]s criticize interventionism as being untenable and liable to cause more economic distortion in the long-run. From this perspective, any attempt to patch up [[capitalism's contradictions would lead to distortions in the economy elsewhere, so that the only real and lasting solution is to replace capitalism with a socialist economy; the effects of government economic interventionism are disputed. Regulatory authorities do not close markets, yet as seen in economic liberalization efforts by states and various institutions in Latin America, "financial liberalization and privatization coincided with democratization". One study suggests that after the lost decade an increasing "diffusion of regulatory authorities" emerged and these actors engaged in restructuring the economies within Latin America. Latin America through the 1980s had undergone hyperinflation; these international stakeholders restricted the state's economic leverage and bound it in contract to co-operate. After multiple projects and years of failed attempts for the Argentine state to comply, the renewal and intervention seemed stalled.
Two key intervention factors that instigated economic progress in Argentina were increasing privatization and the establishment of a currency board. As one can see this exemplifies global institutions including, the International Monetary Fund and the World Bank and propagate openness to increase foreign investments and economic development within places, including Latin America. In Western countries, government officials theoretically weigh the cost benefit for an intervention for the population or they succumb beneath coercion by a third private party and must take action. Intervention for economic development is at the discretion and self-interest of the stake holders, the multifarious interpretations of progress and development theory. To illustrate this, during the 2008 financial crisis the government and international institutions did not prop Lehman Brothers up, therefore allowing them to file bankruptcy. Days when the American International Group waned towards collapsing, the state spent public money to keep it from falling.
These corporations have interconnected interests with the state, therefore their incentive is to influence the government to designate regulatory policies that will not inhibit their accumulation of assets. In Japan, Abenomics is a form of intervention with respect to Prime Minister Shinzō Abe's desire to restore the country's former glory in the midst of a globalized economy. President Richard Nixon signed amendments to the Clean Air Act in 1970 that expanded it to mandate state and federal regulation of both automobiles and industry, it was further amended in 1977 and 1990. One of the first modern environmental protection laws enacted in the United States was the National Environmental Policy Act of 1969, which requires the government to consider the impact of its actions or policies on the environment. NEPA remains one of the most used environmental laws in the nation. In addition to NEPA, there are numerous pol
Business is the activity of making one's living or making money by producing or buying and selling products. Put, it is "any activity or enterprise entered into for profit, it does not mean it is a company, a corporation, partnership, or have any such formal organization, but it can range from a street peddler to General Motors."Having a business name does not separate the business entity from the owner, which means that the owner of the business is responsible and liable for debts incurred by the business. If the business acquires debts, the creditors can go after the owner's personal possessions. A business structure does not allow for corporate tax rates; the proprietor is taxed on all income from the business. The term is often used colloquially to refer to a company. A company, on the other hand, is a separate legal entity and provides for limited liability, as well as corporate tax rates. A company structure is more complicated and expensive to set up, but offers more protection and benefits for the owner.
Forms of business ownership vary by jurisdiction, but several common entities exist: Sole proprietorship: A sole proprietorship known as a sole trader, is owned by one person and operates for their benefit. The owner may hire employees. A sole proprietor has unlimited liability for all obligations incurred by the business, whether from operating costs or judgments against the business. All assets of the business belong to a sole proprietor, for example, a computer infrastructure, any inventory, manufacturing equipment, or retail fixtures, as well as any real property owned by the sole proprietor. Partnership: A partnership is a business owned by two or more people. In most forms of partnerships, each partner has unlimited liability for the debts incurred by the business; the three most prevalent types of for-profit partnerships are general partnerships, limited partnerships, limited liability partnerships. Corporation: The owners of a corporation have limited liability and the business has a separate legal personality from its owners.
Corporations can be either government-owned or owned, they can organize either for profit or as nonprofit organizations. A owned, for-profit corporation is owned by its shareholders, who elect a board of directors to direct the corporation and hire its managerial staff. A owned, for-profit corporation can be either held by a small group of individuals, or publicly held, with publicly traded shares listed on a stock exchange. Cooperative: Often referred to as a "co-op", a cooperative is a limited-liability business that can organize as for-profit or not-for-profit. A cooperative differs from a corporation in that it has members, not shareholders, they share decision-making authority. Cooperatives are classified as either consumer cooperatives or worker cooperatives. Cooperatives are fundamental to the ideology of economic democracy. Limited liability companies, limited liability partnerships, other specific types of business organization protect their owners or shareholders from business failure by doing business under a separate legal entity with certain legal protections.
In contrast, unincorporated businesses or persons working on their own are not as protected. Franchises: A franchise is a system in which entrepreneurs purchase the rights to open and run a business from a larger corporation. Franchising in the United States is widespread and is a major economic powerhouse. One out of twelve retail businesses in the United States are franchised and 8 million people are employed in a franchised business. A company limited by guarantee: Commonly used where companies are formed for non-commercial purposes, such as clubs or charities; the members guarantee the payment of certain amounts if the company goes into insolvent liquidation, but otherwise, they have no economic rights in relation to the company. This type of company is common in England. A company limited by guarantee may be without having share capital. A company limited by shares: The most common form of the company used for business ventures. A limited company is a "company in which the liability of each shareholder is limited to the amount individually invested" with corporations being "the most common example of a limited company."
This type of company is common in many English-speaking countries. A company limited by shares may be a publicly traded company or a held company A company limited by guarantee with a share capital: A hybrid entity used where the company is formed for non-commercial purposes, but the activities of the company are funded by investors who expect a return; this type of company may no longer be formed in the UK, although provisions still exist in law for them to exist. A limited liability company: "A company—statutorily authorized in certain states—that is characterized by limited liability, management by members or managers, limitations on ownership transfer", i.e. L. L. C. LLC structure has been called "hybrid" in that it "combines the characteristics of a corporation and of a partnership or sole proprietorship". Like a corporation, it has limited liability for members of the company, like a partnership, it has "flow-through taxation to the members" and must be "dissolved upon the death or bankruptcy of a member".
An unlimited company with or without a share capital: A hybrid entity, a company where the liability of members or shareholders for the debts of the company are not limited. In this case, the doctrine of a veil of incorporation does not apply. Less common types of companies are: Companies formed by letters patent: Most corpor
The business cycle known as the economic cycle or trade cycle, is the downward and upward movement of gross domestic product around its long-term growth trend. The length of a business cycle is the period of time containing a single boom and contraction in sequence; these fluctuations involve shifts over time between periods of rapid economic growth and periods of relative stagnation or decline. Business cycles are measured by considering the growth rate of real gross domestic product. Despite the often-applied term cycles, these fluctuations in economic activity do not exhibit uniform or predictable periodicity; the common or popular usage boom-and-bust cycle refers to fluctuations in which the expansion is rapid and the contraction severe. The first systematic exposition of economic crises, in opposition to the existing theory of economic equilibrium, was the 1819 Nouveaux Principes d'économie politique by Jean Charles Léonard de Sismondi. Prior to that point classical economics had either denied the existence of business cycles, blamed them on external factors, notably war, or only studied the long term.
Sismondi found vindication in the Panic of 1825, the first unarguably international economic crisis, occurring in peacetime. Sismondi and his contemporary Robert Owen, who expressed similar but less systematic thoughts in 1817 Report to the Committee of the Association for the Relief of the Manufacturing Poor, both identified the cause of economic cycles as overproduction and underconsumption, caused in particular by wealth inequality, they advocated government intervention and socialism as the solution. This work did not generate interest among classical economists, though underconsumption theory developed as a heterodox branch in economics until being systematized in Keynesian economics in the 1930s. Sismondi's theory of periodic crises was developed into a theory of alternating cycles by Charles Dunoyer, similar theories, showing signs of influence by Sismondi, were developed by Johann Karl Rodbertus. Periodic crises in capitalism formed the basis of the theory of Karl Marx, who further claimed that these crises were increasing in severity and, on the basis of which, he predicted a communist revolution.
Though only passing references in Das Kapital refer to crises, they were extensively discussed in Marx's posthumously published books in Theories of Surplus Value. In Progress and Poverty, Henry George focused on land's role in crises – land speculation – and proposed a single tax on land as a solution. In 1860 French economist Clément Juglar first identified economic cycles 7 to 11 years long, although he cautiously did not claim any rigid regularity. Economist Joseph Schumpeter argued that a Juglar cycle has four stages: Expansion Crisis Recession Recovery Schumpeter's Juglar model associates recovery and prosperity with increases in productivity, consumer confidence, aggregate demand, prices. In the 20th century and others proposed a typology of business cycles according to their periodicity, so that a number of particular cycles were named after their discoverers or proposers: The Kitchin inventory cycle of 3 to 5 years The Juglar fixed-investment cycle of 7 to 11 years (often identified as "the" business cycle The Kuznets infrastructural investment cycle of 15 to 25 years (after Simon Kuznets – called "building cycle" The Kondratiev wave or long technological cycle of 45 to 60 years Some say interest in the different typologies of cycles has waned since the development of modern macroeconomics, which gives little support to the idea of regular periodic cycles.
Others realize. Since 1960, World GDP has increased by fifty-nine times, these multiples have not kept up with annual inflation over the same period. Social Contract collapses for nations when incomes are not kept in balance with cost-of-living over the timeline of the monetary system cycle - until hardships/populism/revolution are always seen in late capitalism; the Bible and Hammurabi's Code both explain economic remediations for cyclic sixty-year recurring great depressions, via fiftieth-year Jubilee debt and wealth resets. Thirty major debt forgiveness events are recorded in history including the debt forgiveness given to most european nations in the 1930s to 1954. There were great increases in productivity, industrial production and real per capita product throughout the period from 1870 to 1890 that included the Long Depression and two other recessions. There were significant increases in productivity in the years leading up to the Great Depression. Both the Long and Great Depressions were characterized by market saturation.
Over the period since the Industrial Revolution, technological progress has had a much larger effect on the economy than any fluctuations in credit or debt, the primary exception being the Great Depression, which caused a multi-year steep economic decline. The effect of technological progress can be seen by the purchasing power of an average hour's work, which has grown from $3 in 1900 to $22 in 1990, measured in 2010 dollars. There were similar increases in real wages during the 19th century. A table of innovations and long