{"id":52305,"date":"2023-12-01T17:49:20","date_gmt":"2023-12-01T16:49:20","guid":{"rendered":"https:\/\/www.wifo.ac.at\/publication\/from-prosperity-into-the-crisis-and-back-on-the-role-of-economic-theories-in-the-long-cycle\/"},"modified":"2024-11-07T06:00:11","modified_gmt":"2024-11-07T05:00:11","slug":"from-prosperity-into-the-crisis-and-back-on-the-role-of-economic-theories-in-the-long-cycle","status":"publish","type":"publication","link":"https:\/\/www.wifo.ac.at\/en\/publication\/52305\/","title":{"rendered":"From Prosperity into the Crisis and Back. On the Role of Economic Theories in the Long Cycle"},"content":{"rendered":"","protected":false},"featured_media":0,"template":"","class_list":["post-52305","publication","type-publication","status-publish","hentry"],"acf":{"subtitle":"","text":"This essay reconsiders the interaction between the development of economic theories and economic reality since the 1920ies. I begin with the systemic cause of the financial crisis, the coincidence of three \"bear markets\" (stocks, real estate, commodities) which followed three parallel \"bull markets\". I then sketch the macroeconomic effects of the \"manic-depressive\" fluctuations of asset prices and show how they paved the road into the present crisis. As next step, I explain how \"bulls\" and \"bears\" are brought about. Then I sketch how the treatment of financial markets in economic theory and policy has shaped the long cycle from the financial boom of the 1920ies, the Great Depression, the post-war prosperity under \"realcapitalistic\" framework conditions to the \"finance-capitalistic\" regime since the 1970ies. The paper concludes with proposals how Europe could find roads to new prosperity. After the upcoming financial crisis there will be a window of opportunity to implement these proposals.","onlinedate":"2018-11-02 12:00:00","lang":"English","publication_series":"","publication_date":"20181101","publication_date_year":"","publication_date_full":false,"publication_num_pages":"30","keywords":"[\"Asset price dynamics\"]","jelcodes":"[\"B20\",\"E44\",\"F34\",\"G12\",\"O11\"]","related_publications":"[]","pdf":374470,"zip":null,"link":"","monthly_report":true,"monthly_report_main":false,"monthly_report_volume":"","monthly_report_pages":"","monthly_report_pages_sort":"0","issue":"571","journal":"WIFO Working Papers","publisher":"","invisible":false,"external":false,"embargo_date":"2018-11-02 12:00:00","types":[44410],"research_groups":[3491],"collaboration":"","persons":[3841],"persons_data":"[{\"personId\":3841,\"personName\":\"Stephan Schulmeister\",\"organisationNames\":[]}]","clients":[],"subclients":[],"partners":[],"topics":[],"host_publication_title":"","host_publication_subtitle":"","place_of_publication":"","host_publication_editors":"[]","type_description":"","output_media":"","chapter":"","article_number":"","citations":"{\"apa\":\"<div class=\\\"rendering rendering_researchoutput  rendering_researchoutput_apa rendering_contributiontoperiodical rendering_apa rendering_contributiontoperiodical_apa\\\"><span>Schulmeister, S.<\\\/span> (2018). <span>From Prosperity into the Crisis and Back. On the Role of Economic Theories in the Long Cycle<\\\/span>. <span><em>WIFO Working Papers<\\\/em><\\\/span>, (571). <a onclick=\\\"window.open(this.href, '_blank','noopener,noreferrer'); return false;\\\" href=\\\"https:\\\/\\\/www.wifo.ac.at\\\/wwa\\\/pubid\\\/61485\\\" class=\\\"link\\\"><span>https:\\\/\\\/www.wifo.ac.at\\\/wwa\\\/pubid\\\/61485<\\\/span><\\\/a><\\\/div>\",\"vancouver\":\"<div class=\\\"rendering rendering_researchoutput  rendering_researchoutput_vancouver rendering_contributiontoperiodical rendering_vancouver rendering_contributiontoperiodical_vancouver\\\"><span>Schulmeister S<\\\/span>. <span class=\\\"title\\\"><span>From Prosperity into the Crisis and Back. On the Role of Economic Theories in the Long Cycle<\\\/span><\\\/span>. <span>WIFO Working Papers<\\\/span>. 2018 Nov;(571).<\\\/div>\",\"bibtex\":\"<div class=\\\"rendering rendering_researchoutput  rendering_researchoutput_bibtex rendering_contributiontoperiodical rendering_bibtex rendering_contributiontoperiodical_bibtex\\\"><div>@misc{2ce6eb2e3cf14b678fa2625d73be4d61,<\\\/div><div>  title    = \\\"From Prosperity into the Crisis and Back. On the Role of Economic Theories in the Long Cycle\\\",<\\\/div><div>  abstract = \\\"This essay reconsiders the interaction between the development of economic theories and economic reality since the 1920ies. I begin with the systemic cause of the financial crisis, the coincidence of three {\\\"}bear markets{\\\"} (stocks, real estate, commodities) which followed three parallel {\\\"}bull markets{\\\"}. I then sketch the macroeconomic effects of the {\\\"}manic-depressive{\\\"} fluctuations of asset prices and show how they paved the road into the present crisis. As next step, I explain how {\\\"}bulls{\\\"} and {\\\"}bears{\\\"} are brought about. Then I sketch how the treatment of financial markets in economic theory and policy has shaped the long cycle from the financial boom of the 1920ies, the Great Depression, the post-war prosperity under {\\\"}realcapitalistic{\\\"} framework conditions to the {\\\"}finance-capitalistic{\\\"} regime since the 1970ies. The paper concludes with proposals how Europe could find roads to new prosperity. After the upcoming financial crisis there will be a window of opportunity to implement these proposals.\\\",<\\\/div><div>  keywords = \\\"Asset price dynamics, Asset price dynamics\\\",<\\\/div><div>  author   = \\\"Stephan Schulmeister\\\",<\\\/div><div>  note     = \\\"From Prosperity into the Crisis and Back. On the Role of Economic Theories in the Long Cycle\\\",<\\\/div><div>  year     = \\\"2018\\\",<\\\/div><div>  month    = nov,<\\\/div><div>  language = \\\"English\\\",<\\\/div><div>  journal  = \\\"WIFO Working Papers\\\",<\\\/div><p>}<\\\/p><\\\/div>\",\"ris\":\"<div class=\\\"rendering rendering_researchoutput  rendering_researchoutput_ris rendering_contributiontoperiodical rendering_ris rendering_contributiontoperiodical_ris\\\"><p>TY  - GEN<\\\/p><p>T1  - From Prosperity into the Crisis and Back. On the Role of Economic Theories in the Long Cycle<\\\/p><p>AU  - Schulmeister, Stephan<\\\/p><p>N1  - From Prosperity into the Crisis and Back. On the Role of Economic Theories in the Long Cycle<\\\/p><p>PY  - 2018\\\/11<\\\/p><p>Y1  - 2018\\\/11<\\\/p><p>N2  - This essay reconsiders the interaction between the development of economic theories and economic reality since the 1920ies. I begin with the systemic cause of the financial crisis, the coincidence of three \\\"bear markets\\\" (stocks, real estate, commodities) which followed three parallel \\\"bull markets\\\". I then sketch the macroeconomic effects of the \\\"manic-depressive\\\" fluctuations of asset prices and show how they paved the road into the present crisis. As next step, I explain how \\\"bulls\\\" and \\\"bears\\\" are brought about. Then I sketch how the treatment of financial markets in economic theory and policy has shaped the long cycle from the financial boom of the 1920ies, the Great Depression, the post-war prosperity under \\\"realcapitalistic\\\" framework conditions to the \\\"finance-capitalistic\\\" regime since the 1970ies. The paper concludes with proposals how Europe could find roads to new prosperity. After the upcoming financial crisis there will be a window of opportunity to implement these proposals.<\\\/p><p>AB  - This essay reconsiders the interaction between the development of economic theories and economic reality since the 1920ies. I begin with the systemic cause of the financial crisis, the coincidence of three \\\"bear markets\\\" (stocks, real estate, commodities) which followed three parallel \\\"bull markets\\\". I then sketch the macroeconomic effects of the \\\"manic-depressive\\\" fluctuations of asset prices and show how they paved the road into the present crisis. As next step, I explain how \\\"bulls\\\" and \\\"bears\\\" are brought about. Then I sketch how the treatment of financial markets in economic theory and policy has shaped the long cycle from the financial boom of the 1920ies, the Great Depression, the post-war prosperity under \\\"realcapitalistic\\\" framework conditions to the \\\"finance-capitalistic\\\" regime since the 1970ies. The paper concludes with proposals how Europe could find roads to new prosperity. After the upcoming financial crisis there will be a window of opportunity to implement these proposals.<\\\/p><p>KW  - Asset price dynamics<\\\/p><p>KW  - Asset price dynamics<\\\/p><p>M3  - WIFO series<\\\/p><p>JO  - WIFO Working Papers<\\\/p><p>JF  - WIFO Working Papers<\\\/p><p>ER  - <\\\/p><\\\/div>\"}","scientific_assistance":"[]","scientific_review":"[]","version":"","release_date":null,"expiration_date":null,"surveyor":"","research_assistance":"","edv":"","additional_info_de":"","additional_info_en":""},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v28.0 (Yoast SEO v28.0) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>From Prosperity into the Crisis and Back. On the Role of Economic Theories in the Long Cycle - WIFO<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.wifo.ac.at\/en\/publication\/52305\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"From Prosperity into the Crisis and Back. On the Role of Economic Theories in the Long Cycle\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.wifo.ac.at\/en\/publication\/52305\/\" \/>\n<meta property=\"og:site_name\" content=\"WIFO\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/WIFOat\/\" \/>\n<meta property=\"article:modified_time\" content=\"2024-11-07T05:00:11+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.wifo.ac.at\/wp-content\/uploads\/2024\/05\/WIFO-Gebaeude-FotoAlexanderMueller-www.alexandermueller.at-IMG_6326-Bearbeitet-1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1920\" \/>\n\t<meta property=\"og:image:height\" content=\"1280\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:site\" content=\"@WIFOat\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.wifo.ac.at\\\/en\\\/publication\\\/52305\\\/\",\"url\":\"https:\\\/\\\/www.wifo.ac.at\\\/en\\\/publication\\\/52305\\\/\",\"name\":\"From Prosperity into the Crisis and Back. On the Role of Economic Theories in the Long Cycle - WIFO\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.wifo.ac.at\\\/en\\\/#website\"},\"datePublished\":\"2023-12-01T16:49:20+00:00\",\"dateModified\":\"2024-11-07T05:00:11+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/www.wifo.ac.at\\\/en\\\/publication\\\/52305\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/www.wifo.ac.at\\\/en\\\/publication\\\/52305\\\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/www.wifo.ac.at\\\/en\\\/publication\\\/52305\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Startseite\",\"item\":\"https:\\\/\\\/www.wifo.ac.at\\\/en\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"From Prosperity into the Crisis and Back. On the Role of Economic Theories in the Long Cycle\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/www.wifo.ac.at\\\/en\\\/#website\",\"url\":\"https:\\\/\\\/www.wifo.ac.at\\\/en\\\/\",\"name\":\"\u00d6sterreichisches Institut f\u00fcr Wirtschaftsforschung\",\"description\":\"\",\"publisher\":{\"@id\":\"https:\\\/\\\/www.wifo.ac.at\\\/en\\\/#organization\"},\"alternateName\":\"WIFO\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/www.wifo.ac.at\\\/en\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\\\/\\\/www.wifo.ac.at\\\/en\\\/#organization\",\"name\":\"\u00d6sterreichisches Institut f\u00fcr Wirtschaftsforschung\",\"alternateName\":\"WIFO\",\"url\":\"https:\\\/\\\/www.wifo.ac.at\\\/en\\\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/www.wifo.ac.at\\\/en\\\/#\\\/schema\\\/logo\\\/image\\\/\",\"url\":\"https:\\\/\\\/www.wifo.ac.at\\\/wp-content\\\/uploads\\\/2024\\\/05\\\/WIFO_kurz_rechts-2-1920x412.jpg\",\"contentUrl\":\"https:\\\/\\\/www.wifo.ac.at\\\/wp-content\\\/uploads\\\/2024\\\/05\\\/WIFO_kurz_rechts-2-1920x412.jpg\",\"width\":2000,\"height\":429,\"caption\":\"\u00d6sterreichisches Institut f\u00fcr Wirtschaftsforschung\"},\"image\":{\"@id\":\"https:\\\/\\\/www.wifo.ac.at\\\/en\\\/#\\\/schema\\\/logo\\\/image\\\/\"},\"sameAs\":[\"https:\\\/\\\/www.facebook.com\\\/WIFOat\\\/\",\"https:\\\/\\\/x.com\\\/WIFOat\",\"https:\\\/\\\/linkedin.com\\\/company\\\/wifoat\\\/\",\"https:\\\/\\\/www.youtube.com\\\/@WIFO_at\"],\"description\":\"Das WIFO, 1927 von Friedrich August von Hayek und Ludwig von Mises zur Konjunkturanalyse gegr\u00fcndet, ist heute das f\u00fchrende Institut f\u00fcr angewandte empirische Wirtschaftsforschung in \u00d6sterreich mit starkem Engagement auf europ\u00e4ischer Ebene.\",\"email\":\"office@wifo.ac.at\",\"telephone\":\"+43 1 798 26 01 \u2013 0\",\"legalName\":\"\u00d6sterreichisches Institut f\u00fcr Wirtschaftsforschung\",\"foundingDate\":\"1927-01-02\",\"numberOfEmployees\":{\"@type\":\"QuantitativeValue\",\"minValue\":\"51\",\"maxValue\":\"200\"},\"publishingPrinciples\":\"https:\\\/\\\/www.wifo.ac.at\\\/institut\\\/mission-und-strategie\\\/\",\"ownershipFundingInfo\":\"https:\\\/\\\/www.wifo.ac.at\\\/institut\\\/organisation\\\/\",\"actionableFeedbackPolicy\":\"https:\\\/\\\/www.wifo.ac.at\\\/aktuelles\\\/presse\\\/\",\"correctionsPolicy\":\"https:\\\/\\\/www.wifo.ac.at\\\/institut\\\/kontakt\\\/\",\"ethicsPolicy\":\"https:\\\/\\\/www.wifo.ac.at\\\/institut\\\/evidenzbasierung-transparenz-und-unabhaengigkeit\\\/\",\"diversityPolicy\":\"https:\\\/\\\/www.wifo.ac.at\\\/institut\\\/gleichstellung\\\/\",\"diversityStaffingReport\":\"https:\\\/\\\/www.wifo.ac.at\\\/institut\\\/gleichstellung\\\/\"}]}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"From Prosperity into the Crisis and Back. On the Role of Economic Theories in the Long Cycle - WIFO","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.wifo.ac.at\/en\/publication\/52305\/","og_locale":"en_US","og_type":"article","og_title":"From Prosperity into the Crisis and Back. On the Role of Economic Theories in the Long Cycle","og_url":"https:\/\/www.wifo.ac.at\/en\/publication\/52305\/","og_site_name":"WIFO","article_publisher":"https:\/\/www.facebook.com\/WIFOat\/","article_modified_time":"2024-11-07T05:00:11+00:00","og_image":[{"width":1920,"height":1280,"url":"https:\/\/www.wifo.ac.at\/wp-content\/uploads\/2024\/05\/WIFO-Gebaeude-FotoAlexanderMueller-www.alexandermueller.at-IMG_6326-Bearbeitet-1.jpg","type":"image\/jpeg"}],"twitter_card":"summary_large_image","twitter_site":"@WIFOat","schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.wifo.ac.at\/en\/publication\/52305\/","url":"https:\/\/www.wifo.ac.at\/en\/publication\/52305\/","name":"From Prosperity into the Crisis and Back. On the Role of Economic Theories in the Long Cycle - WIFO","isPartOf":{"@id":"https:\/\/www.wifo.ac.at\/en\/#website"},"datePublished":"2023-12-01T16:49:20+00:00","dateModified":"2024-11-07T05:00:11+00:00","breadcrumb":{"@id":"https:\/\/www.wifo.ac.at\/en\/publication\/52305\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.wifo.ac.at\/en\/publication\/52305\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.wifo.ac.at\/en\/publication\/52305\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Startseite","item":"https:\/\/www.wifo.ac.at\/en\/"},{"@type":"ListItem","position":2,"name":"From Prosperity into the Crisis and Back. On the Role of Economic Theories in the Long Cycle"}]},{"@type":"WebSite","@id":"https:\/\/www.wifo.ac.at\/en\/#website","url":"https:\/\/www.wifo.ac.at\/en\/","name":"\u00d6sterreichisches Institut f\u00fcr Wirtschaftsforschung","description":"","publisher":{"@id":"https:\/\/www.wifo.ac.at\/en\/#organization"},"alternateName":"WIFO","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.wifo.ac.at\/en\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.wifo.ac.at\/en\/#organization","name":"\u00d6sterreichisches Institut f\u00fcr Wirtschaftsforschung","alternateName":"WIFO","url":"https:\/\/www.wifo.ac.at\/en\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.wifo.ac.at\/en\/#\/schema\/logo\/image\/","url":"https:\/\/www.wifo.ac.at\/wp-content\/uploads\/2024\/05\/WIFO_kurz_rechts-2-1920x412.jpg","contentUrl":"https:\/\/www.wifo.ac.at\/wp-content\/uploads\/2024\/05\/WIFO_kurz_rechts-2-1920x412.jpg","width":2000,"height":429,"caption":"\u00d6sterreichisches Institut f\u00fcr Wirtschaftsforschung"},"image":{"@id":"https:\/\/www.wifo.ac.at\/en\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/WIFOat\/","https:\/\/x.com\/WIFOat","https:\/\/linkedin.com\/company\/wifoat\/","https:\/\/www.youtube.com\/@WIFO_at"],"description":"Das WIFO, 1927 von Friedrich August von Hayek und Ludwig von Mises zur Konjunkturanalyse gegr\u00fcndet, ist heute das f\u00fchrende Institut f\u00fcr angewandte empirische Wirtschaftsforschung in \u00d6sterreich mit starkem Engagement auf europ\u00e4ischer Ebene.","email":"office@wifo.ac.at","telephone":"+43 1 798 26 01 \u2013 0","legalName":"\u00d6sterreichisches Institut f\u00fcr Wirtschaftsforschung","foundingDate":"1927-01-02","numberOfEmployees":{"@type":"QuantitativeValue","minValue":"51","maxValue":"200"},"publishingPrinciples":"https:\/\/www.wifo.ac.at\/institut\/mission-und-strategie\/","ownershipFundingInfo":"https:\/\/www.wifo.ac.at\/institut\/organisation\/","actionableFeedbackPolicy":"https:\/\/www.wifo.ac.at\/aktuelles\/presse\/","correctionsPolicy":"https:\/\/www.wifo.ac.at\/institut\/kontakt\/","ethicsPolicy":"https:\/\/www.wifo.ac.at\/institut\/evidenzbasierung-transparenz-und-unabhaengigkeit\/","diversityPolicy":"https:\/\/www.wifo.ac.at\/institut\/gleichstellung\/","diversityStaffingReport":"https:\/\/www.wifo.ac.at\/institut\/gleichstellung\/"}]}},"_links":{"self":[{"href":"https:\/\/www.wifo.ac.at\/en\/wp-json\/wp\/v2\/publication\/52305","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.wifo.ac.at\/en\/wp-json\/wp\/v2\/publication"}],"about":[{"href":"https:\/\/www.wifo.ac.at\/en\/wp-json\/wp\/v2\/types\/publication"}],"version-history":[{"count":1,"href":"https:\/\/www.wifo.ac.at\/en\/wp-json\/wp\/v2\/publication\/52305\/revisions"}],"predecessor-version":[{"id":374456,"href":"https:\/\/www.wifo.ac.at\/en\/wp-json\/wp\/v2\/publication\/52305\/revisions\/374456"}],"acf:post":[{"embeddable":true,"href":"https:\/\/www.wifo.ac.at\/en\/wp-json\/wp\/v2\/person\/3841"},{"embeddable":true,"href":"https:\/\/www.wifo.ac.at\/en\/wp-json\/wp\/v2\/research_group\/3491"},{"embeddable":true,"href":"https:\/\/www.wifo.ac.at\/en\/wp-json\/wp\/v2\/publication_type\/44410"}],"wp:attachment":[{"href":"https:\/\/www.wifo.ac.at\/en\/wp-json\/wp\/v2\/media?parent=52305"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}