Originally your reviewer was not motivated to discuss Het economisch getij by Sam de Wolff. For, the Heterodox Gazette is itself a continuing review and praise of the lifework of De Wolff. But gradually yet the notion has grown, that Het economisch getij deserves a separate analysis. Perhaps this review stimulate others to once more study the ideas of De Wolff.
Although nowadays Het economisch getij has been forgotten, in 1929 when it appeared, it caused commotion among economists. At the time the quality and originality were commended. For instance, J.R.M. van den Brink, the catholic minister of economic affairs and director of the Amro bank, tells: "I bought [Het economisch getij] as one of my treasures in the beginning of the 'great depression' in a bookstall in the Oudemanhuispoort in Amsterdam. During the seventies I again began to read it" and "When as a beginning student of economics in 1934 I look out of my window, I see a row of ragged men: a daily returning row of unemployed who register at the counter of a quickly established stamp office. Then the analysis of Sam de Wolff of the long business cycle is at the front of my bookshelf!"1
The famous economist Jan Tinbergen has just finished his studies in 1929, and then reviews Het economisch getij in the magazine De Socialistische Gids. He states: "When we finally try to summarize the meaning of this book in a few lines, then we must first say that it is a vivid book. The easy style in general and the polemic character of the various parts stimulate the interest. The power of this book, I believe, must be mainly found in the presented insights with respect to the theory of the conjuncture to beginning students and interested persons. (...) It will certainly incite many readers to ponder and it is always a good thing, when this can be said about a book". This is an enthusiastic comment from the always heart-headed Tinbergen2.
Jacob van der Wijk, well-grounded in economics, and a family-friend of de Wolff, states: "The appreciation, which the work received in several foreign circles, has probably helped to favourably influence the opinion with regard to the scientific meaning of this work in the Netherlands". Cleverly, Van der Wijk cites prof. J. van Gelderen, who is commonly a critic of De Wolff: "It must be acknowledged, that (...) after Hilferding's book Das Finanzkapital and Rosa Luxemburg's Die Accumulation des Kapitals such a wide attempt, aided by and building on the performance of Marx as an economist, to obtain fruitful economus outcomes, has not been undertaken any more"3.
De Wolff undertakes in Het economisch getij the gigantic task to theoretically explain the economic conjuncture. His theory builds on the works of marxist authors (Marx and Engels, as well as successors such as Tugan Baranowsky, and the mentioned Luxemburg and Hilferding). According to De Wolff the theory of the conjuncture is not a separate discipline, but she must be developed in an integral manner with a theory of economic growth4. De Wolff has the advantage with regard to his marxist predecessors, that he is at home with mathematical techniques. Therefore he (as well as his congenials Jacob van der Wijk and Asse Baars) is pre-eminently qualified to modernize marxism5. Besides, De Wolff begins his study with collecting an enormous amount of statistical data. Here he introduces econometrics in the marxist theory.
What does the contents of Het economisch getij have to offer? The book begins with a historical survey of the development of the theory of business cycles. On p.51 an important study of the mentioned J. van Gelderen is introduced, which observes a cycle with a period of more than forty years, in addition to the short-term fluctuations. Apparently the conjuncture has a double movement6. Next De Wolff presents an impressive collection of statistical data. At the time the gross domestic product is not yet calculated, so that De Wolff must use more superficial indicators. Here, notably the price indices of various goods must be mentioned. De Wolff bases his arguments mainly on a composite index, namely the index number of Sauerbeck for food-stuff and materials.
The index of Sauerbeck is a measure for the conjuncture, because the hausse commonly causes inflation, and the baisse causes des-inflation or even deflation. In these empirical data De Wolff mainly studies the long-term fluctuations. For this purpose, he also analyzes alternative indices, such as the production volume of raw materials, the establishment of railroads, and the labour productivity7. Already on p.80 De Wolff models the long cycle in the economic tide, where he simply updates the model of Van Gelderen. Next on p.193 he also models the short cycle.. Originally, this had a period of ten years, but it shrinks, to seven years after 1900 8.
Incidentally, it seems that De Wolff had made this discovery already far before 1929, and he has presented it in the article Prosperiteits- en depressieperioden from 1921 9. Thus according to de Wolff the short and the long cycle both reach their trough in 1927 (see p.188). Thus he has predicted the Great Depression of 1929! Unfortunately, this success has boosted his already significant self-conceit, and also made his opponents even more vile. And indeed De Wolff is too positive here10.
Now that De Wolff has discovered a model for the conjuncture, he searches for a possible explanation. He starts from the marxist assumption, that in capitalism the crises have an endogenous (inherent) cause. For, he has just shown, that the conjuncture exhibits a regular pattern. Here he adds interesting statistics, which show that the conjuncture correlates with human behaviour. Thus one could suppose, that for instance a hausse forms due to a preceding birth wave! De Wolff does not believe this, and even states that marriages and births are a reaction to the conjuncture11. He even makes the provocative hypothesis, that precisely during the economic prosperity the people become politically active, whereas then also many wars are started. That could contribute to the formation of the crisis.
But according to De Wolff, following the common opinion, the investments are the decisive cause of the economic conjuncture, as the driving force. The investments as a whole exhibit a certain regularity, because the machines wear out in approximately the same time. Now De Wolff wants to show, that once the investments had started with an economic wave movement. For this he uses the theory of the famour economist W.S. Jevons, who believes that the investments are encouraged by abundant harvests. The harvests depend on the meteorological conditions, and these are affected by the sun spots. And the sun spots would form with a regular time pattern. De Wolff embraces this theory, and supports her by analyzing the numbers, calculated by the astronomer R. Wolf (the so-called Relativzahlen), as a measure for the activity of the solar spots.
This also completes the explanation of the conjuncture: the solar spots give regularity to the harvests and the investments, and subsequently the depreciations of the production equipment maintain this regularity. However, the presented meteorological statistics of De Wolff leave so much room for doubt, that his explanation has hardly found any scientific approval. In short, the explanation, which De Wolff proposes for the conjuncture, is even more controversial than the conjuncture model itself. In itself this is not a disaster, because in principle completely accurate models do not exist. However, De Wolff has always believed that his argument is the absolute truth, and unfortunately this has hurt his scientific authority12.
Next the second part of the book begins, which elaborates on the structural economic growth. This part is at least as interesting as the considerations about the conjuncture. Despite the fact that De Wolff is a staunch propagandist of the labour theory of value, here he applies the theory of marginal utility. This is partly due to the sociologist Rudolph Kuyper, who already in 1902 introduced the paradigm of marginal utility in Dutch marxism. De Wolff makes the intriguing choice to ignore the modern version of the paradigm of marginal utility, and to apply the original version, which has been developed by the German Herman Gossen. The version of Gossen uses the available time of people as the measure for the allocation of economic quantities, whereas the modern version performs calculations based on quantities of products. Thus for Gossen and De Wolff the time allocation is central, similar to Marx's approach.
It turns out that this indeed has advantages, and the approach of Gossen has recently even been revived in the work of Nobel price winner G.S. Becker. In this case the intuition of De Wolff leads to success13. The theory of marginal utility states, that consumption leads to pleasure (or lust, satisfaction, well-being, utility). Following Gossen, De Wolff assumes, that also the performance of labour leads to displeasure (discontent, dissatisfaction, disutility). When someone works, then he produces a useful product, but also experiences a growning feeling of displeasure. Thus one can calculate the equilibrium, where the utility and disutility exactly compensate each other. This point determines the size of the social product14. Gossen and De Wolff also describe the time allocation for the case, where someones can generate various useful products. Furthermore, De Wolff studies the time allocation for differing types of labour.
De Wolff also points out, that in capitalism there is not necessarily full employment. He distances himself from the theory of marginal productivity, which assumes an equilibrium on the labour market. Since De Wolff does not want to apply this neoclassical theory, he must invent his own theory for the labour market. And he indeed succeeds in developing a smart model, which allows tho calculate the unemployment and the gross domestic product. This model even shows how the labour market will change as a result of technological progress. This model is so powerful, that one wonders why the common textbooks do not refer to it15.
Now that De Wolff has calculated the size of the product, he starts his analysis of the economic structure. For this he uses the famous multi-sector model, which Karl Marx and Friedrich Engels present in the second volume of Das Kapital. This allows to calculate the proportions of the various branches. De Wolff creatively extends the multi-sector model to the situation, where between times the production technique can change. In other words, this model of De Wolff takes into account the rising organic composition of the production. Incidentally, it seems that De Wolff has published this model many years before, namely in his article Accumulatie en crisis from 1915 16.
Next De Wolff states, that a rising stock of capital goods will necessarily lead to a rising labour productivity. It is too complex to include this in his model, and therefore De Wolff is forced to use a qualitative argument. A rising productivity corresponds to a rising exploitation, certainly when she occurs in the branch of end consumption (food). The Wolff argues: when the exploitation increases, then the entrepreneur keeps a larger share of his production. His surplus value increases. According to De Wolff the entrepreneur can not invest his extra-profit without at the same time distorting the proportions of production. Thus he proves by negative demonstration, that a continuous rise of the rate of surplus value is impossible. The consequence is, that the rate of surplus value can only increase by means of shocks. In this manner De Wolff also offers a theoretical explanation for the occurrence of crises.
In conclusion: suppose that there would be no regularity in the solar spots, which cause periodic investments. Even then the investments can not occur in a continuous manner, because this would permanently disrupt the proportions in the production process. Therefore the waves of investments are discomforting but necessary moments of innovation, which subsequently allow the economy to proceed in fixed structural proportions for some time. Nonetheless, the proof of this theory of step-wise development of the rate of surplus value looks a bit problematic. It raises more questions than it solves17.
It must be regretted that after the appearance of Het economische getij De Wolff has not published a follow-up study. However, it was no longer the time. For, shortly thereafter in Germany fascism seized power. Therefore the German social-democracy disappeared, which had been such an important source of inspiration for De Wolff. And the future vision of a socialist society lost its credibility. Moreover, fascism was a direct existential threat for De Wolff and his Jewish community. It motivated De Wolff to spend more time on social activities, such as Zionism.
Your reviewer believes that the overall balance of Het economisch getij is clearly positive. De Wolff has presented a rich collection of statistical data of the conjuncture. His models remain original and creative. They are not all convincing, but yet some of his ideas are ahead of his time. This is particularly the case, when De Wolff revives the time allocation according to Gossen. Worthy of praise is also the marxist multi-sector scheme, and his statement that the scheme is not reconcilable with a rising labour productivity. Your reviewer prefers to see Het economisch getij as more than merely a curiosity. The book has sufficient quality to qualify as a scientific work - despite its deficiencies. Economists who study the conjuncture can still find interesting and relevant material in this book.