Five Economic Long Waves in History: Based on Schumpeter's Economic Cycle Theory

Nikolai D. Kondratieff's long wave cycle hypothesis was the first theory that described the long-term economic fluctuations. Schumpeter analyzed and illustrated the formation of long wave from multiple aspects in the economic cycle theory, believing that the technological innovation was the root cause, the four-stage model represented the track of movement, the nested pattern of three cycles indicated internal circulation, and the external change was the one of causes for economic cycle. In light of the Schumpeter economic cycle theory and the new Schumpeterian theory, the causes of five economic long waves in history are analyzed from the perspective of technological innovation. The results show that the causes of the rise and fall in all the long waves are very similar: long wave boom is driven by major technological innovation, and long wave recession is caused by failure of technology innovation, and the turning point of every long wave cycle from prosperity to recession is triggered by the burst of the stock market bubble. Therefore, as the new round of industrial revolution is in the ascendant and the COVID-19 pandemic is impacting the world economy, China must improve its ability of technological innovation so as to take the lead in the future development.