Tuesday, 23 December 2014

A theory of economic recession

Let's get straight into the start of the Introduction to my doctoral thesis. I started working on this at the end of 1979, and I found it all much more complicated than ever I could have anticipated, not least because I wanted to go deep back into earlier times, to gain some context of what was happening during modern times, like what was happening month by month in the 1980s.


Please remember that what I am writing was based on writing of a quarter of a century ago, and that the start of my analysis started more than a third of a century ago.


I have abridged the earlier edition, not to try to add new things, nor to eliminate embarrassing mistakes, but rather to cut out extranious comments, and to avoid things being complicated by long footnotes, and references to other writers, some of which were useful, but some note. Anyone who has been in contact with the academic system will know many of the problem.


The current version is based on my earlier site,

Also, I am deciding now to use different typefaces, without using lots of covering. I am using Verdana (as here) when writing new stuff, 2014 and beyond), while using Comic when writing up my earlier work (see below).

So here goes!  




The Economic Geography of Recession in the UK: the early 1980s and Historical Perspectives 
(Originally published 1989)  


1(a) Recession in the UK - the economic long cycle

The primary aim of the research has been to gain a detailed understanding of the economic geography and historical structure of slump. It is not possible, however, to understand the slump by examining only the slump. There are some intervening questions to be considered.

For the slump itself, the central questions are:
(a) Why do slumps occur?
(b) How does the economic geography of the slump of the early 1980s differ from the economic geography of preceding non-slump periods?
and
(c) How does the economic geography of the slump of the early 1980s differ from the geography of earlier slumps, most particularly the slump of the early 1930s?

Each of these questions is itself highly complex.
The work "slump" is used in a technical sense to mean the last and most severe recession in a series of unusually severe economic recessions. Following the slump, which is distinguished from other recessions by being both unusually long and exceptionally severe, it is generally to be found that there will be a prolonged period of fast and relatively smooth economic growth.

The slump is thus a pivotal phase in economic history. Before the slump, there is a long period, lasting perhaps ten to fifteen years, of generally depressed economic conditions, while after the slump there is a much more expansive period, lasting perhaps thirty years or thereabouts. If one calls the depressed pre-slump and slump phases the "downswing", and the post-slump period the "upswing", then one has identified the two arms of the so-called 50 year "long cycle".

The existence of this long cycle has been a matter of intermittent controversy for a long time, with proponents of the long cycle theory tending to suggest that empirical regularities in economic time series of the last 150 years are significant, and opponents of the long cycle theory tending to suggest that any such seeming regularities are spurious, given the small number of alleged cycles under consideration.

The argument is based mainly on identifying the internal structure of the long cycle, rather than chasing after empirical regularities. It is argued that there is a systematic succession of phases of economic growth, in which a slump is followed by a period of vigorous economic recovery, which in turn is followed by a prolonged period of steady economic growth, which itself fades away into a period of slower economic growth, with recessions tending to become successively more severe, with a slump representing the culminating phase of this series of recessions. The question of the existence or otherwise of the 50 year long cycle depends, it is suggested, on whether this succession of phases, this internal structure, can accurately be identified in the historical record over a prolonged period, rather than on whether certain major economic time series may be shown to incorporate a statistically significant 50 years periodicity.

It is perhaps to be expected that any theory of the long cycle developed in such unusual years as 1981 and 1982 would tend to emphasise the importance of the slump, but this emphasis still seems fully appropriate despite the passage of a few years of post-slump recovery. A theory of the long cycle is equally a theory of slump, and vice versa. Without a theory of the long cycle, it would be difficult to indicate why slumps should occur at certain times, generally following a long phase of economic depression, and not at other times.

The theory of the long cycle provides a useful framework for the analysis of regional patterns of employment change, and of unemployment, in the United Kingdom in the 20th century.

Chapter 4 presents an analysis of employment change in the turbulent inter-war years, during which time unemployment was generally high. It is shown that regional differences in the rate of employment change were extremely sharp in the downswing and slump phases, prior to 1932. There was fairly steady employment growth in Southern England, briefly checked by the slump, but there were occasional sharp falls in employment elsewhere, particularly in coal mining and textiles. These dynamic contrasts were to become far more muted after the slump, when industrial decline was halted and there was widespread expansion of employment across all regions. While there was substantial employment growth in all regions after 1932, this growth was not nearly sufficient to absorb all the unemployment in the depressed regions.

Chapters 5 and 6 cover the the post-war "long boom" from the late 1940s to the mid-1960s, and also the patterns of accumulation of unemployment between 1966 and 1979. Much use is made of detail year to year patterns of employment change in the period from 1966 to 1978. Chapter 5 asks what happened after the vigorous post-slump recovery, while chapter 6 concentrates on the events before 1979. Industrial employment grew steadily, though with cyclical fluctuations, between 1945 and 1966, but declined substantially after 1966. Perhaps the single most startling statistic of the post-1966 “years of affluence” was that industrial employment (including mining, quarrying, and construction) had declined from 12,000,000 to 7,000,000 in the fourteen years since 1966, with much of this decline taking place outside the slump.

Much use has been made of the detailed results of the 1978 and 1981 Censuses of Employment to examine detailed geographical patterns of employment change through some highly critical years. In every chapter of this thesis the material incorporated into the final version is considerably less than the total information collected. In no case is this more true than in the two chapters on the slump. Much of the early research work was essentially based on keeping up with events as they happened during the slump, with a continuing examination of spatial patterns of industrial job loss (as reported in the Financial Times and elsewhere) and changes in unemployment.

(c) Colin Crouch 2014


I will try to clarify a few extra points tomorrow.







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