Economic Cycles
Economic cycles, more commonly called business cycles, are the recurring expansion and contraction of the national economy. This is a phenomenon that is unique to a private or free-enterprise economic system, also called a capitalist economy. Other systems do experience some of the same characteristics of the free-enterprise economy; however, business/economic cycles in the capitalistic economy are the focus of attention in this discussion.
The individual who is most famous for research on the business/economic cycle is Wesley Mitchell. He defined the business cycle as follows:
Business cycles are a type of fluctuation found in the aggregate economic activity of nations that organize their work mainly in business enterprises; a cycle consists of expansions occurring at about the same time in many economic activities, followed by similarly general recessions, contractions, and revivals which merge into the expansion phase of the next cycle; this sequence of changes is recurrent but not periodic; in duration business cycles vary from more than one year to ten or twelve years; they are not divisible into shorter cycles of similar character with amplitudes approximately their own. (Burns and Mitchell, 1946, p. 3)
This definition illustrates Mitchell's point that business/economic cycles occur in private-enterprise but not other systems.
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