ABSTRACT
Having reviewed the major long-wave theories, we have now arrived at the point where we can present our own explanation of forces which have determined the long-cyclical development of the industrial economies since the Industrial Revolution. Our explanation contains three major building blocks. These are: the concepts of innovation, innovation life cycles, and infrastructural investment. Innovations and the life cycles that emerge from them form the long-wave engine on the output side of the growth process: infrastructural investment required by innovation is an output factor as well as an input factor. It reinforces growth during the upswing and is also a determinant of the supply-side of the economy. We see other variables, which also fluctuate in a long-wave fashion, as dependent variables. That is, we do not see the growth of money supply, the distribution of income over labour and capital, the attitude towards risk taking, or even war and war preparation as autonomous forces. Rather, their fluctuations seem to us to be derived from the forces mentioned earlier.
