Re: Schumpeter and the Capitalist Process.

 Bruce,
 Thank you for granting me some attention. And may I
try your patience a little farther? Can we briefly
suppose that demande IS behind the cyclical
progression of development? But demand, first for
investment, then for consumption, seems only to grow
when debts increase. Demand for investment can grow,
if added value is "saved" from consumption. And demand
for consumption can grow, if investments are reduced.
Each can draw growth from a reduction of the other.
But, for growth in demand to be real, credit and loans
must increase. (I haven't found definite confirmation
of this. Neither have I found any contradiction of it,
worth mentioning.)
 Credit and loans have a vast variety of life spans.
From a few days to thirty years and more. (I remember
Disney issuing 100-year bonds, in the late 90s). The
way these loans are paid back also varies. Either it
is done progressively or at the end of their term.

 Supposing all is well so far, let us then suppose
that all debts are of one kind only. 5-year loans
repayable at the end of their term, at a rate of
interest of 5% paid yearly. The granting of these
loans, which increases demand and leads to
development, can be carried out in two different ways.
Either, (1) the amount borrowed is the same every
year. Or, (2) the amount borrowed each year increases,
to maintain a constant growth rate in demand.
 Round figures.

 1. At the start, total demand is 2000. Then, 100 are
borrowed every year. The first year, demand grows from
2000 to 2100, giving a growth rate of 5%. The second
year, interest of 5 is payed back and 100 are
borrowed. Demand grows from 2100 to 2195, giving a
growth rate of 4.5%
Year 3: 10    , 100, 2195/2285, 4%
     4: 15    , 100, 2285/2370, 3.6%
     5: 20    , 100, 2370/2450, 3.3%
 The sixth year, interest of 25 and the first 100 are
paid back, and 100 are borrowed. Demand falls from
2450 to 2425, giving a growth rate of minus 1%.
Year 7: 30+100, 100, 2425/2395, -1.2%
     8: 35+100, 100, 2395/2360, -1.5%
     9: 40+100, 100, 2360/2320, -1.7%
    10: 45+100, 100, 2320/2275, -2%

2. At the start, total demand is 2000. the first year
100 are borrowed. This gives a growth rate of 5%,
which must be maintained from one year to the next.
The second year, demand must grow from 2100 to 2205
(+5%) and interest of 5 is paid back. 110 must be
borrowed.
Year 3: 2205/2315, 10    , 120
     4: 2315/2430, 15    , 130
     5: 2430/2550, 20    , 140
 The sixth year, demand must grow from 2550 to 2680
(+5%). Interest of 30 and the first 100 are paid back.
260 must be borrowed.
Year 7: 2680/2815, 35+110, 280
     8: 2815/2955, 45+120, 305
     9: 2955/3105, 55+130, 335
    10: 3105/3260, 65+140, 360

 In the first case, the growth rate in demand
decreases and turns negative the sixth year.          
(-4.3points)    
 In the second case, borrowing increases and explodes
the sixth year (+85%)
 Comparing this to Schumpeter's curves (1-year and
2-year debts for Kitchin, 5-year debts for Juglar,
10-year debts for Kuznets and 30-year debts for
Kondratieff) has convinced me that this explanation is
close to observed reality. Or is it just tinkering
with numbers and ifs and buts??
 I'm afraid one has to print the attached curves to
read them properly. I haven't managed to do better
yet. 
  Regards, Kenneth

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