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Cooking the Books: A History of Slumps

To mark the 50th anniversary of the publication of its Quarterly Bulletin the Bank of England published an article in the June issue entitled ‘The UK Recession in context – what do three centuries of data tell us?’ This took a look at the booms and slumps since 1701.

Actually, the terms used are ‘upturns’ and ‘downturns’. A downturn is defined as the period between the highest point production reached and the lowest point it falls to before it starts to rise again, i. e., from peak to trough. An upturn is the opposite, the period from trough to the next peak. A cycle is defined as the period from peak to peak or from trough to trough.

A table gives the average length of cycles for various historical periods:


Average annual GDP growth (%)

Downturn (years)

Upturn (years)

Total cycle (years)



























The inclusion of data from the 18th century is interesting but doesn’t tell us much about cycles of capitalist production. Not that the economy of the period could not be described in a sense as capitalist, but because the upturns and downturns were caused not so much by the workings of the economy itself as by the outside factors of war (in this century Britain was frequently at war) and bad harvests (agriculture then accounted for 30 per cent of GDP).

It is the later periods that are more relevant for the study of the capitalist production cycle.

1831-1871 was the period Marx studied in Capital and his other economic writings, though he identified the first crisis of industrial capitalism as occurring in 1825 (which can been seen in Chart 1 in the article). He suggested a cycle of about 10 years, not too far from the 8-year cycle the article identifies. At 2.21 per cent a year, this was a period of relatively rapid growth with the short downturns, a period of confident capitalist expansion.

On the other hand, 1871-1913 was a period of slower growth, with the downturns lasting just as long as the upturns and which misled Engels into thinking that capitalism had entered a period of permanent stagnation.

It is perhaps surprising to learn that the period 1921-1938 was also a period of relatively rapid growth with only short downturns but, apart from the severe but short-lived slumps of 1921 and the early 1930s, in Britain this was a period of growth in output, even if mainly confined to the South East and the Midlands. In the rest of the country unemployment remained high and shaped the popular perception of the 1930s as one big Great Depression.

The authors do not explain why they lumped together 1952-1992 as a single period when it would have been more historically useful to have broken it in the mid-1970s when the biggest downturn since 1945 occurred (as can also be seen in Chart 1). Even so, during both parts of this period the cycles were shorter with fewer deep troughs than in the previous historical periods.

According to the article’s definition, as output is up on the trough of 2008 we are now in the upturn phase of the cycle even though, five years later, production is still nowhere near the 2007 level. It looks as if the current cycle is going to be longer than in the recent past. In fact it looks more like what happened in the period 1871-1913.