ABSTRACT
The discussion of economic fluctuations dates back to the nineteenth century, to the classical political economists. However, these scholars were essentially concerned with the process of capital accumulation, and did not develop a proper theory of cycles. Arguably, economic fluctuations in most pre-capitalist societies were irregular and highly related to shocks to agricultural production. Most discussions related to what eventually would become part of business cycle theory were related to the acceptance or rejection of Say’s law and the possibility of a general crisis. The marginalist revolution that brought the neoclassical model to the center of the economics discipline, in contrast, suggested that the system did have a tendency to the full utilization of resources, including labor. In this view, crises and eventually cycles were either deviations from the optimal output level or changes to the optimal level itself, caused by shocks in both cases—monetary in the former and real in the latter.
