Pascal Michon

Rhythm as Form of Economic Process (part 1)

Article publié le 14 February 2018

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It seems that the use of the term rhythm in economics dates at the earliest from the beginning of the 20th century. Although Clément Juglar (1819-1905) is often considered as the inventor in the 1860s of the notion of “economic rhythm,” this attribution seems actually rather incorrect and to result from a posteriori projection.


In 1856 and 1857, Juglar published two important essays: “Des crises commerciales en France de l’an VIII à 1855 – On Commercial Crises in France from 1800 to 1855” and “Des crises commerciales et monétaires de 1800 à 1857 – On Commercial and Monetary Crises from 1800 to 1855, followed in 1862 by his most famous book: Des crises commerciales et leur retour périodique en France, en Angleterre et aux États-Unis – On Commercial Crises and their Periodic Return in France, England and the United States, a revised and expanded edition of which was published in 1889. He also published two dictionary articles under the title: “Crises commerciales – Commercial Crises,” in 1863, in the Dictionnaire général de la politique, M. Block (ed.) and in 1891, in the Nouveau dictionnaire de l’économie politique, Léon Say et Joseph Chailley (ed.).


In his magnum opus Business Cycles (1939), Joseph Schumpeter (1883-1950) credited Juglar with three significant innovations: firstly, the systematic use of empirical data arranged in time series; secondly, the discovery and the complete morphological description—by “phases”—of the cycle phenomenon linking observation with an original theoretical framework; thirdly, “a clear conception of the way in which theory, statistics and history should cooperate in our field” (Schumpeter, 1954, p. 483, quoted by Frobert, 2014, p. 9). Because of these original ideas, Schumpeter ranked Juglar among the greatest economists and baptized “Juglar” one of three characteristic cycles, with “Kitchin” and “Kondratieff,” punctuating the process of creative destruction that swept away modern capitalism.


There is no doubt that by introducing the concept of cycle and by basing it on statistic series, Juglar made a decisive breakthrough that led economists to reconsider the notion of crisis which started to be viewed only as one phase among others in a larger phenomenon. He also introduced in economics the idea that the variations in the economy were not exogenous, i.e. triggered only by wars, disasters, climat changes, etc. but endogenous, i.e. determined by internal causes. These sometimes brutal variations were to be understood as a normal phenomenon resulting from the development of the industrial and capitalist economy itself.


However, as can already be noticed from the titles of Juglar’s works, among the concepts that were available to him through his medical education, to designate this new phenomenon, he did not choose rhythm, maybe because it was still defined as mere ratio between the time of dilation and that of contraction, but crisis, period and cycle which instead were to become soon very popular in medicine (see vol. 2, chap. 2). If I am not mistaken, there is not a single occurrence of the term rhythm in all the aforementioned essays where one find instead a massive use of the three other ones (for Juglar’s last three texts, I used Frobert’s edition, 2014).

 The Spread of Rhythm in Economics (1908-1975)

The term rhythm seems to have been introduced in economics, concurrently in France and the United States in the 1910s. It was used for the first time in a quite systematic fashion by Albert Aftalion (1874-1956) in Les crises périodiques de surproductionThe Periodic Overproduction Crises, published in 1913 and in a more subdued way by Wesley C. Mitchell (1874-1948) in his Business Cycles, published the very same year.


After WW1, the term rhythm spread in France in the successively revised and expanded editions of a prewar work by Jean Lescure (1882-1947): Des crises générales et périodiques de surproductionOn General and Periodic Overproduction Crises (1906, 1907, 1923, 1932, 1938), and in a study by Bertrand Nogaro (1880-1950): La crise économique dans le monde et en France published in 1936. A remark made in 1923 by Lescure shows how recent and also how successful this term was.

And since we love [on affectionne] to characterize our phenomenon [the business cycle] with the term rhythm, this rhythm necessitates a conductor. Otherwise each instrument would play its score without worrying about the neighbor. (Des crises générales et périodiques de surproduction, 3rd ed., 1923, p. 375)

It also met with a certain amount of success in the United States through the works of Warren M. Persons (1878-1937) and Charles J. Bullock (1869-1941), who were influenced by Mitchell and founded in 1917 the Harvard University Committee of Economic Research, which was the first research institution on business cycles to win recognition from the scientific world. In the 1930s, the Austrian-born economist Joseph A. Schumpeter (1883-1950), who taught at Harvard University from 1932 till his death, used it frequently in his famous Business cycles: a theoretical, historical, and statistical analysis of the capitalist process published in 1939.


But the success of rhythm in economics was not limited to these two countries. In the 1920s, rhythm became commonplace in the vocabulary of German economists. Ernst Friedrich Wagemann (1884-1956) published in 1928 Konjunkturlehre: Eine Grundlegung zur Lehre vom Rhythmus der Wirtschaft, which was translated into English and published only two years later under the title Economic Rhythm: A Theory of Business Cycles. He was followed in 1932 by Wilhelm Röpke’s Krise und Konjunktur translated in 1936 under the title: Crises and Cycles, in which the term rhythm was also frequently used.


It made its way into Scandinavian countries, where a young Swedish economist, Johan Åkerman, (1896-1982), who had been educated at Harvard in 1919-1920, devoted his 1928 PhD Dissertation to Om det Ekonomiska Livets Rytmik – Rhythmics of Economic Life, and a few years later another book published in 1931 and translated the very next year under the title Economic Progress and Economic Crisis, in which he again commonly used the term rhythm.


By contrast, it is interesting to note that the term rhythm was seemingly absent in Marxist authors—I could check only in Marx’s Capital (1867, 1885, 1894), Sam de Wolff’s “Prosperitäts- und Depressionsperioden” (1924) and Kondratiev’s “Bol’schije cykly konjunktury” (1925) – Germ. trans. “Die langen Wellen der Konjonktur” (1926) – Eng. trans. “The Long Waves in Economic Life” (1935), in which the term “long wave” was due to a poor early translation of “long cycle” from Russian to German. It was also very rarely used in F. Simiand’s Les fluctuations économiques à longues périodes et la crise mondiale, published in 1932, where Simiand presented a view inspired by the sociological Durkheimian School on the current world crisis and the long-wave cycles. Similarly, possibly due to his own intimate knowledge of the peculiarities of the rhythm in music and dance and above all to his opposition to any conceptual confusion, it did not penetrate into John Maynard Keyne’s vocabulary (1883-1946). I could not find any occurrence of the term in The General Theory of Employment, Interest, and Money (1936). Keynes referred only to “ The Trade Cycle” (Chap. 22).


Except in these marginal cases, this rhythmic wave lasted at least until the 1960s, then recessed. Strikingly, rhythm is barely taken into account in the index of Daniele Besomi’s recent bibliographical study Crises and Cycles in Economic Dictionaries and Encyclopaedias (2012), which concentrates on the opposition “cycle” vs “fluctuation” (p. 105-107), as if the term was nowadays of no concern any longer among economists interested in crises and cycles.


A study with the Google Books Ngram Viewer seems to confirm both the rise of this rhythmic wave and its regression. This program charts frequencies of search strings using a yearly count of “n-grams,” or contiguous sequence of n items, found in sources printed between 1800 and 2000. For this survey, I chose to look at the frequency of the phrases “rythme économique” and “rythmes économiques” in French (fig. 1); “economic rhythm” and economic rhythms” in English (fig. 2); finally, “wirtschaftlichen Rhythmus” and “Rhythmus der Wirtschaft” in German (fig. 3).


Fig.1 – rythme économique, rythmes économiques (1800-2000)



Fig. 2 – economic rhythm, economic rhythms (1800-2000)



Fig. 3 – wirtschaftlichen Rhythmus, Rhythmus der Wirtschaft (1800-2000)



These charts clearly show an increase in the use of the term rhythm in the literature starting as soon as the end of the 19th century in French and strongly developing during the interwar period in all three languages. The 1940s witnessed a brief decrease but there was a second powerful wave that started right after WW2 and lasted until the end of the 1960s or the mid-1970s in English, German and French. The following stagnation was probably due to the disinterest, not to mention stronger skepticism, for business cycles in economics between the mid-1970s and the mid-2000s, when a very violent crisis showed how much “countercyclical” policies were still needed. Consequently rhythm can be expected to have resurfaced in the following years, although I lacked data to check this hypothesis.


In order to specify the meaning taken by the term rhythm in economics, we can start from Aftalion’s and Mitchell’s works where it was for the first time systematically used. We will then compare it with some uses collected in various works published in the 1920s and 1930s.

 Rhythm as Periodic or Cyclic Oscillation of Economic Activity (Aftalion – 1908-1913)

As early as 1908, Albert Aftalion (1874-1956) outlined an original theory of economic crises and business cycles in a series of articles published in the Revue d’économie politique – Journal of Political Economy, the Revue économique internationale – International Economic Journal and Histoire des doctrines économiques – History of Economic Doctrines, which were the basis for a full-grown treatise in two volumes published in 1913: Les crises périodiques de surproductionThe Periodic Overproduction Crises. Thanks to this remarkable achievement, Aftalion undoubtedly became the leading French theoretician on business cycle in the early 20th century.


In the Preface to his treatise, Aftalion paid homage to Juglar for having been one of the first to point out that “the crisis is only one of the moments in a whole cycle that is taking place periodically, if, it is true, the most painful” (I, p. vi). But he emphasized that the impulse given by his predecessor had to be brought further so that “when the subject is better known, we will talk less about crises of overproduction and more about economic cycles” (I, p. vi.).


A period of prosperity and the following period of depression formed a “cycle” and their repetition a sequence of “periodic cycles.”

The two alternating phases together form a cycle. The repetition of these cycles allows to consider them as periodic cycles. (Les crises périodiques..., 1913, I, p. 5, my trans.)

Thus, the crisis was to be considered only as “the point where the transition from prosperity to depression takes place” and therefore to be explained from “the whole cycle.”

The crisis is the point of intersection of these two periods, the point where the transition from prosperity to depression takes place. It marks the completion of one phase and the beginning of the other. (Les crises périodiques..., 1913, I, p. vi, my trans.)

These cycles did not have equal duration—they lasted “seven to ten years” (I, p. 13)—nor equal intensity or even continuity (I, p. 13-18, 42). For in each cycle there were specific factors, especially “long term oscillations” (I, p. vii) or “long term movements,” that extended one phase or reduced another.

The long term movement [mouvements de longue durée] prolongs the cyclic movement which takes place in the same direction and shortens the cyclic movement which takes place in the opposite direction.” (Les crises périodiques..., 1913, I, p. 14, my trans.)

Nevertheless, these cycles were “periodic,” “general” if considered within a particular economy, and “international” (I, p. 18-20).

[When reduced to the same base] the strong agreement between the price rhythms in the different countries is revealed more clearly. At the same time, one can perceive the great simultaneity of the fluctuations and similarity in their intensity. (Les crises périodiques..., 1913, I, p. 20, my trans.)

As Juglar, Aftalion’s purpose was to explain the various phases forming a cycle and to account for their succession (I, p. ix, 17). But, the crisis as well as the whole cycle could not be explained only, as his predecessor suggested, by the psychology of the businessmen, their exaggerate optimism, their excessive speculation, and the fluctuations of the credit supplied by the banks. Instead, in a pre-Keynesian fashion, Aftalion proposed to explain the crisis by the joint role of acceleration or delay in production within a theory of overcapitalization. Just like Lescure, with whom he debated in 1910 in the Journal of Political Economy, he developed a theory in which the notion of overproduction, and symmetrically insufficient demand, which he differentiated from insufficient consumption, in fixed capital as much as consumer goods, played a key role, and which was therefore radically different from the interpretation proposed by Juglar which was based only on excessive speculation joint with abuse of credit.


As far as we are concerned, the most striking feature of Aftalion’s work was the introduction and generalization of the concept of rhythm in economics.


The observation of price series, but also of profits, wages, production and employment, revealed a “regular rhythm” in the succession of cycles of “prosperity” and “depression.”

A regular rhythm alternates a series of years of prosperity, characterized by rising prices, rising incomes, high intensity of productive activity, with years of depression when prices remain low, heavy stocks of goods weigh on the market, and unemployment among workers and factory equipment is high. (Les crises périodiques..., 1913, I, p. vi, my trans.)

Interestingly, whereas Juglar used to borrow some concepts from medicine, Aftalion compared the economic rhythm with that of poetry. By rhythmically punctuating the economic life, the crisis was analogous to the rhyme in verse.

[The crisis] emphasizes the cadence of the rhythm as does the rhyme in verse. So we cannot understand and explain what is happening at the very moment of the crisis without having examined the whole cycle. (Les crises périodiques..., 1913, I, p. vi, my trans.)

But this mention of verse was made in passing and appeared as the solitary remnant of a humanist education. The most important analogue used by Aftalion was by far the living being. The whole society was presented as a great “organism” (I, v)—but, in the two volumes, he never used the word “system”—within which the various functions concurrently and rhythmically varied.

For a long time [the cycles] tended to be seen as one of the peculiarities of the play of credit and speculation in modern societies. [...] [However] it is the whole economic life, in its most diverse aspects, which follows cyclic fluctuations. The swaying of alternating phases concerns an innumerable multitude of phenomena in the most dissimilar spheres of social activity and in the most different countries. This fact is quite remarkable and must be strongly underlined. Without question, it is highly instructive that, in spite of the complexity of economic relations, and the multiplicity of factors acting in all directions, combining, associating, intersecting or opposing each other, we can see that so many phenomena, prices, wages, interest, profits, unemployment, cost, productivity, concentration, work accidents, production, companies, industrial machinery, trade, discount rate, assets of banks, transport, foreign trade and a bunch of others, that so many industries, metallurgical industries, mining, textile, building industries, transport, and in so many countries, let themselves engage in parallel or corresponding rhythmic oscillations. (Les crises périodiques..., 1913, I, p. vii-viii, my trans.)

Whereas this organism remained in Traditional societies more or less stable, it started to develop and complexify with the industrialization. In Modern societies the interplay of the oscillating functions periodically triggered “crises of overproduction.”

From time immemorial, humanity has known such disturbances of the economic equilibrium, these pathological states of the social organism, which we call crises. But it is only about a hundred years since the phenomenon of periodic crises of overproduction manifests itself. (Les crises périodiques..., 1913, I, v, my trans.)

To designate these interlaced variations, Aftalion used several concepts—most often in the plural—almost equivalent in his eyes: movements, fluctuations, oscillations, cycles, and rhythms. If “movements” remained little specific, “fluctuations” and “oscillations” indicated variations between a maximum and a minimum (I, p. 6) which were endowed with a certain regularity. “Fluctuations” evoked the movements on the surface of a liquid and was close to the notion of “wave.” “Oscillations” suggested, on the other hand, the swing of a pendulum and a stronger regularity. “Cycles” was referring to a circular return of a phenomenon similar to that of the planets and the stars. However there was actually no clear difference between these expressions that were used by Aftalion alternately out of sheer desire to avoid stylistic repetition. In a quite remarkable way, rhythm crowned the series and replaced, in many occurrences, one or the other of the preceding concepts, as we will see now by looking into Les crises périodiques de surproduction.

 Rhythm of Prices and Incomes

Aftalion’s work was divided into two large volumes The Variations in Prices and Incomes. The Dominant Theories (324 p.) and The Periodic Movements of Production. A Theoretical Essay (418 p.) and organized, in the old fashioned way, in 11 “Books.”


The first Volume began with a quote from Juglar stating that “the crisis coincides with the halt in prices rise,” which explained why Book I was to be entirely devoted to prices. Significantly, Aftalion indistinctly used phrases such as “price rhythm [or rhythms]” (p. 1, 18, 29, 37, 40, 44, 56, 105, 135, 141, 151, 175, 217, 294), “price fluctuations” (p. 25), “rhythmic movements of prices” (p. 7, 293), “rhythmic oscillations of prices” (p. 5, 102, 157, 294), “rhythmic fluctuations [of prices]” (p. 103, 108, 109), “cyclic movements of prices” (p. 110), “cyclic oscillations [of prices]” (p. 15, 68, 100, 102, 110), “cyclic fluctuations of prices” (p. 54, 65, 73, 86).


Book II was dedicated to income, whether wage or profit. Similarly, Aftalion used phrases such as “rhythm of wages” (p. 114, 119, 121, 122, 123, 128, 133, 134, 135, 139, 141, 151, 157, 167, 175), “rhythmic variations of wages” (p. 125), “rhythmic fluctuations of wages” (p. 127, 141), “periodic oscillations of incomes” (p. 111, 204), “periodic oscillations of wage [or wages]” (p. 113, 134, 151), “cyclic oscillations of wage” (p. 141).


In Chapter II, since the variations in income depended on those of labor productivity and workers action, Aftalion also used expressions such as “rhythm of productivity” (p. 135, 141) and “rhythm of workers action” (p. 145). Changes in economic activity thus led, in Chapter IV, to “periodic oscillations of unemployment” (p. 163)—or in the Table of Contents: “rhythm of unemployment” (p. 322, 164, 166)—but also, in Chapter V, to “periodic oscillations of pauperism and crime” (p. 168, 170).


Naturally, interest rates also varied, in Chapter VI, according to “rhythms” (p. 171, 175), “periodic oscillations” (p. 171), “periodic fluctuations” (p. 173), resulting in Chapter VII in “periodic oscillations of profits” (p. 182, 189), “cyclic oscillations of profits” (p. 187), “fluctuations of profit” (p. 183) and “rhythm of profit(s)” (p. 193), which explained, in Chapter VIII, “the rhythm of bankruptcy” (p. 200, 201).


Finally, in Chapter X, the oscillations of wages and profits had a variable influence on the “rhythm of nuptiality and birth rate” (p. 207, 210).


Book III was devoted to cost and productivity. Aftalion began, in Chapter I, with “the rhythm of the cost in money” (p. 211) following up, in Chapter II, with “the rhythm of the cost in kind and of productivity” (p. 213), and, in Chapter III, “the causes of the rhythm of productivity” (p. 217). Then he analyzed, in Chapter IV, “the cyclic oscillations in technical progress” (p. 226), in Chapter V, “the cyclic variations in industrial concentration and enterprise selection” (p. 229), and, in Chapter VI, “the cyclic and long-term variations in productivity” (p. 237). He devoted the chapter VII, to the “rhythm of the cost in human existence” (p. 241) and the “rhythm of work and railway accidents” (p. 242, 243). The last two chapters of this book were devoted to the “rhythm of the cost of money” (p. 244, 245, 246, 248) in general and in specific industries.


Book IV was dedicated to the dominant theories and their explanation of crises. Not surprisingly, there were fewer references to rhythm in it (p. 294, 295, 298, 316).

 Rhythm of Production and Capital

In the second Volume The Periodic Movements of Production, Book V was entitled “The Rhythm of General Production and the First Essay of Explanation” (vol. 2, p. 5). After having dealt with the data concerning price fluctuations in the 19th century France, Great Britain, United States and Germany, which were considered since Juglar as the main causes of the economic crises, Aftalion wanted to complement this first view with another one developed from the angle of production. According to him, this perspective was indeed utterly missing in the previous works on business cycles and he wanted to prove that if crises were correlated with strong variations in prices, the latter were in turn correlated with the fluctuations of production.


The first chapter of Book V dealt with “the periodic oscillations of the liquid capital of firms and the rhythm of general production” (p. 7), “the fluctuation of the capital” (p. 7), and “the rhythm of the capital” (p. 12). Chapter II observed “the rhythm of the production according to that of the metallic and fiduciary circulation” (p. 14), “the rhythm of clearing” (p. 19). Chapter III did the same with “the rhythm of production according to that of the circulation of goods” (p. 21), with particular attention to “the fluctuations in the quantities transported by rail” (p. 21) and “the periodic movements of foreign trade” (p. 23).


Chapter IV finally proposed a “first attempt to explain the rhythm of prices by that of production” (p. 29 and 39). It suggested the possible relation between “the cyclic oscillations of global production” and “the rhythm of prices” (p. 30), or that of the “fluctuations of the global production” and “that of the prices” (p. 30), or that of “the rhythm of global production” and “that of the general numbers index of prices” (p. 34, 39).

The movements of production and supply of goods account for the periodic movements of prices. Their downfall, in particular, the crisis, is the result of overproduction. (Les crises périodiques..., 1913, II, p. 38, my trans.)

However, Chapter V recognized some loopholes in this first theory. The latter explained “the existence of the price rhythm” but not “the duration of its phases.”

[As a result of the increase in production] should not prices have decreased throughout [the boom period]? But they have gone up. Similarly, the stagnation of production is immediately apparent after the crisis. Should not the prices have gone up almost immediately after the crisis? In fact, they continued to decline. [...] The observation of the rhythm of general production therefore only includes the occurrence of a rise, then a general decline in prices, the existence of a rhythm. It does not give us the explanation of the duration of this increase or decrease, the duration of the phases of the rhythm. This is an antinomy which constitutes one of the great difficulties of the theory of cycles and periodic crises. How can price increase last for the next three or four years of prosperity, how can it make it believe in a persisting under-production for a whole period when production is so large? How can price fall continue during the three or four years of depression, why does it seem to imply overproduction during an entire period when production ceases to increase? (Les crises périodiques..., 1913, II, pp. 40-41, my trans.)

In order to check if “the truth would not be in a new theory of underconsumption [actually underdemand, as we shall see] more firmly built than its elders?” (p. 44), Book VI dealt with “the rhythm of the production of industrial machinery and raw materials” (p. 45). Chapter I was devoted to “the rhythm of production of raw materials, pig iron and coal, and the action of demand on their prices” (p. 45). Chapter II dealt with “the oscillations in the intensity of the current production of fixed capital” (p. 52). Chapter III with “the cyclic oscillations in the growth of steam engines in operation” (p. 60). Chapter IV with “the oscillations in the number of the various machines in operation in the processing industries” (p. 76). Chapter V with “the oscillations in used tools in railway operations” (p. 89). Chapter VI with “cyclic oscillations in shipbuilding” (p. 105). Chapter VII summarized the previous findings in a “great law” concerning the fluctuations in fixed capital:

1. Fixed capital increases by alternating periods of strong and feeble growth. 2. The differences between the figures of these periods are extremely considerable. Fixed-capital-producing industries witness either considerable increase or drowsiness in their activity. 3. The same chronological relationship almost always persists between the movements of the fixed capital and the alternating phases of the cycles. Periods of strong capital growth begin and end late on the beginning or the end of general prosperity. Periods of low growth of fixed capital begin in the depression some time after the crisis and extend during the first years and up to the core of prosperity. (Les crises périodiques..., 1913, II, p. 114, my trans.)

To complement the study of capitalistic consumption, Book VII analyzed “the cyclic oscillations in the production of consumer goods” (p. 127). Chapter I discussed “the periodic fluctuations in the quantities of residential dwellings” (p. 127). Chapter II, “the cyclic oscillations [fluctuations, in the Table of Contents] in the production of the cotton industry” (p. 132). Chapter III, “the movements of production in wool and other textile industries” (p. 145). Chapter IV, “ the cyclic oscillations in the production of metal consumer goods” (p. 152). Chapter V, “ the oscillations of production in the consumer goods industry taken as a whole” (p. 156).


Book VIII was devoted to “a second attempt to explain the price rhythm” (p. 171). Chapter I proposed “the explanation of the general price rhythm” (p. 171 and 207). As mentioned in Book V, Chapter V, there were some discrepancies in the usual explanation of the fluctuations of prices by those of the production. The two curves had “different rhythms.” This difference was caused first by the necessary delay in the building of plants and installation of new machinery triggered by the relative lack of capital and consumer goods during the beginning of prosperity, and the inevitable delay in stopping the use of these costly plants and equipments to produce capital and consumer goods when the depression had already begun.

Because of certain characteristics of the capitalist technique of production, i.e. the long time which is necessary to manufacture machinery, and because of the continuance of the activity of this durable and costly machinery, we observe two dissimilar rhythms in particular industries [viz. capital equipments and consumer-goods industries]. And the rhythm of general production results from the combination of these two rhythms. (Les crises périodiques..., 1913, II, p. 171, my trans.)

The delay in the final rhythm of production should then be explained by the conjunction of two more elementary rhythms: that of the production of plants and equipments, and that of consumer goods which yet remained the driving force behind both of them.

If two dissimilar rhythms are observed in the production of the various kinds of goods, in that of goods distant to the satisfaction of the needs as well as in that of goods close to it, it is the rhythm of the production, of the supply of this second category of objects that presides over the general movement of prices. [...] In spite of the two different rhythms of production, the general price rhythm is unique because it obeys the decisive impulse of one of them. It is the rhythm of the supply of goods which are closer to the satisfaction of needs, finite fixed assets, objects of consumption, which is the engine of the general oscillations of prices. (Les crises périodiques..., 1913, II, p. 179-180, my trans.)

Chapter III looked into the rhythm of the storing of goods and its effects on the rhythm of prices. The conclusion was that the “rhythm of supply” quite possibly determined the “price rhythm” but that it was now necessary, in order to prove it conclusively, to take into account those of the demand.

It may be assumed that the cyclic oscillations of prices throughout their duration are due to the movements of the supply, to the alternation of overproduction and underproduction of certain categories of goods, finished machinery and consumer goods. But we cannot be sure. Perhaps the rhythm of supply is sufficiently explanatory of the full extent of the price rhythm. But perhaps other factors intervene alongside supply. It is now appropriate to consider what concerns the demand. (Les crises périodiques..., 1913, II, p. 216, my trans.)

 Rhythm of Demand and Speculation

Consequently, Book IX dealt with “the rhythm of the demand. Its action on prices” (p. 219). Aftalion analyzed, in Chapter I, “the rhythm of the actual demand for consumer goods” (p. 219). Then in chapter II, “the causes of the rhythm of the demand and the nature of its action” (p. 233), “the causes of the periodic variations of the income in money” (p. 233). In Chapter III, “the rhythm of the demand for fixed capital” (p. 243).


These additional analyses allowed Aftalion to suggest, in Chapter IV, a “third attempt to explain the rhythm of prices” (p. 246). If the variations of prices were clearly determined by the oscillations of the supply of plants, equipments, and ultimately consumer goods, the model was still based on the abstract hypothesis of a demand which was rising regularly. Therefore, to be closer to the facts, “the rhythm of the demand” ought to be taken into account to supplement the first rhythmic model.

While remaining dependent on the rhythm of supply, the rhythm of demand strengthens the action of the latter in a very appreciable way as to the intensity and perhaps also the duration of price oscillations. (Les crises périodiques..., 1913, II, p. 250, my trans.)

To that, Aftalion added, in Chapter V, “the rhythm of the speculative demand” (p. 251), which should be also taken into account since it exacerbated the oscillations in prices, even if the latter were mainly determined by the “rhythm of supply” (p. 255).


These progressive addenda allowed Aftalion to finally propose a fourth model which, this time, integrated all aspects of the problem of price rhythm.

We have thus completed the examination of the successive approximations by which it was necessary to pass in order to take into account the complexity of the factors acting on the rhythm of prices and to highlight the respective influence of each one of them. It is ultimately the supply of certain categories of goods as it operates under the conditions created by the capitalist technique of production which, with the help of a secondary action of demand, has appeared, as a result of successive repercussions, to explain the rhythm of prices and consequently that of incomes. (Les crises périodiques..., 1913, II, p. 258, my trans.)

Book X addressed “the theoretical possibility of overproduction and insufficient demand” (p. 257). Chapters I to IX dealt with the first point and concluded “the impossibility of a permanent general overproduction” (p. 337). In Chapter I, Aftalion rejected the objections based on the existence of branches having very different rhythms. For him, the production followed only one “great rhythm of ebb and flow.”

The perpetual agitation of the little waves of the Ocean, which constantly displaces their respective situation, does not prevent them from obeying the same great rhythm of ebb and flow. It is this overall rhythm that brings about the general overproduction. (Les crises périodiques..., 1913, II, p. 268, my trans.)

Otherwise, there was little mention of rhythm in these chapters, except in Chapter X which addressed the question of “the theoretical possibility and the meaning of an insufficient demand” (p. 340), and finally considered “the origin of the rhythm of the demand” (p. 341).

The rhythm of the demand is one of the factors of the movements of prices. But it is a factor whose strength should not be overrated. (Les crises périodiques..., 1913, II, p. 351, my trans.)

At the beginning of Book XI, Aftalion warned the reader that he was now to engage in “a second phase” of his reflection. After having demonstrated the causal link between the “cyclic oscillations of production” and “those of prices,” one must look, he claimed, into the reasons of the rhythm of production itself: “Why then this alternation between over- and underproduction?” (p. 353)


Chapter I analyzed the “action of prices on production” (p. 353) and Chapter II that of the “capitalist technique [on production]” (p. 356). Chapter III was concerned with “the intensity and possibility of the rhythm of capitalization” (p. 371), a title which was rephrased a little further down as “the possibility of fluctuations in material capitalization” (p. 337), and finally “the possibility of the rhythm of capitalization in value or industrial investments” (p. 378). Chapter IV explored “the causes of the generality of the rhythm of production” (p. 386), and Chapter V “the causes of the international character of the production rhythm” (p. 393).


After this long journey into Aftalion’s rhythmic economics, let us recapitulate the most important points. Aftalion rejected Juglar’s explanation of the economic crisis by the only play of speculation and excessive credit, which were to him only consequences of deeper phenomena. He saw its origin and consequently that of the whole business cycle in the gap between the time when a rise in prices attracts investment and the moment when eventually the invested capital will produce goods, or conversely the time when a fall in prices triggers a fall in investment that will then result in a relative contraction of production and, after a certain period of time, trigger recovery.

The capitalist technique leads, by prolonging the rise in prices during prosperity and their decline during the depression, alternately to excessive or insufficient production of machinery [outillage]. It drives the economic organism into the mechanistic succession [engrenage] of [phases of] over-capitalization leading to the crisis and phases of under-capitalization bringing back prosperity. (Les crises périodiques..., 1913, II, p. 403, my trans.)

What Juglar did not see was that there is a dynamic and endogenous contradiction at the core of the economic activity that makes “the cycles unfold in a rhythmic way their alternating phases of prosperity and depression, feverish industrial activity and deplorable unemployment.”

The periodicity of crises is due to the way in which capitalist production tends to return to equilibrium. By a sort of cruel irony, the effort to restore order is the cause of the maintenance of disorder. The desire to adjust production to the desires of consumption, to compensate for the excesses or insufficiency of this production leads to its constant maladaptation to the needs. But disorder takes, if I may say so, a regular pace [allure]. The cycles unfold in a rhythmic way their alternating phases of prosperity and depression, feverish industrial activity and deplorable unemployment, at the intersection of which the crisis takes place. (Les crises périodiques..., 1913, II, p. 411, my trans.)

In short, for Aftalion, there was not a single economic aspect that was not both fluctuating and periodic, and therefore rhythmic. The whole society, when observed through its economic life, was rhythmic. But as for Juglar, these crises were inevitable and, in the long run, beneficial to the whole “social organism.” The periodic crises were only the natural result of the complex interplay of the variations of its functions.


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