Fifteen years after the Global Financial Crisis: Recessions and Business Cycles in the History of Economic Thought

Forecasting the cycle: Soviet practices in the 1920s

Burina Elizaveta, University of Paris 1 Panthéon-Sorbonne

Real output fluctuations and the issues related to capitalist business cycles were significant topics in Soviet economic science and statistics in the 1920s. Probably, the most serious research in that area was conducted at the Kondratiev Conjuncture Institute. Researchers working at the Institute suggested a multitude of ideas to explain the underlying reasons for business cycles, some of them anticipating later Western theories (for example, professor Shaposhnikov (1927) believed that the main driver of economic dynamics was the «animal spirit»). At the same time, the study of economic dynamics was at the center of discussions also at Gosplan, the Central Planning Committee of the Soviet Union. The character of the research at Gosplan was, however, rather normative, unlike that produced at Kondratiev Institute, where the researchers were interested in the methodology of the empirical research and in constructing indices, thus employing the positive approach. The business cycles theories developed in the Soviet Union of that time could be roughly divided into two groups: theories claiming that the drivers of the fluctuations were exogenous (e.g. harvests or even solar activity, following Jevons’ suggestion) and those stating that the fluctuations are caused by the endogenous factors, i.e. by the design of the economic system (theories based mainly, but not only on Marx’s view of the capitalist business cycles). Among the examples, we can cite Sergei Pervushin (1925) who emphasized the shaping role of the harvests in economic dynamics, while Vladimir Bazarov (1927) stated that cycles and, therefore, crises are immanent to capitalism due to the credit availability and the resulting overproduction. At the same time, the question that interested many economists both at Kondratiev Institute and at Gosplan was the forecasting of future fluctuations. This paper focuses on some forecasting methods proposed by the Soviet economists of that time. When referring to Russian and Soviet theories in the area of business cycles, historians and economists usually cite Kondratiev and, maybe, Tugan-Baranovsky. However, there were many other researchers who proposed original approaches to the study of business cycles and fluctuations forecasting. This paper will focus on the works of Vladimir Bazarov (1927), Yakov Gerchuk (1925), and Dmitri Oparin (1927). These three researchers were chosen to illustrate different approaches to the problems of forecasting. As shown in the paper, Bazarov (who paid special attention to the recovery period in the early 1920s) suggested a chemistry-inspired mathematical model; Gerchuk (who worked on assessing the capacities of different markets) claimed that the statistical, i.e. empirical, approach was not suitable for the forecasting, and only analytical economic analysis could give some solid foundation for predictions, while Oparin suggested some statistical methods that would make forecasting more accurate.

Area: Eshet Conference

Keywords: forecasting, capitalist cycles,

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