Economic cycles

Collective emotions undergo a regular long-term oscillation between acceptance of change and fear of change. The oscillation is regulated by the natural beat of a number of economic cycles.

Research on US data indicates the existence of a 3.33-year inventory adjustment cycle. This cycle was first described by Joseph Kitchin in 1923.

Three Kitchin cycles constitute a 10- to 11-year  capital expenditure cycle. This cycle was reported by Clement Juglar in 1862.

In principle, three Juglar cycles constitute an overarching infrastructure cycle. This cycle - which involves changes to understandings about the world and to the structures that support new understandings  - has parallels with the cycle proposed by Brian Berry in 1991.  

The additional insight offered by HelmsmanĀ® Economics is that each set of three Juglar cycles is activated by an economic shock. However, the shock is not an exogenous phenomenon - it comes  from within the system. It materialises in the later stages of the last cycle in a Juglar triad. It creates its own form of damage but has to be followed by a period of psychological adjustment. During this phase, collective attitudes start to assimilate the fact that conditions have changed. 

The interlude lasts for the duration of a Kitchin cycle. Only after it has been completed can any real progress be made.

The cycle of collective emotions