These periods of relatively rapid growth followed by periods of relative economic stagnation are known as the business cycle. It is an inherent part of the capitalist system.
Some examples of the business cycle are listed above such as the Wall Street crash in 1929 followed by the Great Depression, the huge real estate bubble in Japan in 1980's followed by the "lost decade". Or the Dot Com bubble/Real estate bubble followed by this period of recession that we are currently experiening.
At the beginning of each of these cycles, wealth, jobs and happiness is created through hard work, creativity, late hours and ingenuity.
Yet, years later this wealth, happiness and employment which people had laboured so hard for, is inevitably snatched from grasp as we reach the top of upward swing and enter the downward shift of the business cycle.
Thus, those additional hours that were spent in the office on a Saturday morning instead of watching their kids football match in order to get that promotion amounts to nothing.
However, the severity and the frequency of these upturns and downturns can be reduced by protecting the weak through social and economic order, as highlighted by Wilhelm Röpke, thus ensuring that the Saturday morning in the office was not worthless. This can be achieved through interventions that will accelerate and soften the adjustment process. These interventions will occur through methods that are compatible with the market economy.
As a consequence citizens and companies feel more secure, confident and happier about the future. This confidence ensures that both individuals and citizens do not make stupid and reckless decisions that are purely based on short term thinking and a lack of security. Instead, the existence of economic and social order allows citizens to be prudent and more balanced in their decision making.
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