Crisis and economic cycles

The capitalist or market based economies are characterized by two opposite phenoms:
- on one hand, the market based economy stimulates the technological innovation and the income accumulation, in such order, that hadn't comparision in History;
- but, on the other hand, this positive upgrading is pauted by big perturbations in the economic system with dramatic consequenves: decrease in income, unemployment, underutilization of economic factors and social instability;

But, if it's time that the capitalism is cyclically marked by recessions, it's also true that this is nowadays the most robust paradigm. It wins agianst other supposedly strong paradigms, like the communism: the "proof" is that, all the countries that want to accompany the global economy, needed to adopt some of the capitalist principles. But, above all,  despite of the capitalism can be a winner, the economic theory studied and presents us with the concepts of "economic trend" and "economic cycle".

As we can see, this chart shows that the observed product rarely matches with the tendential output
Thus, the economy traverses periods of recession succeeded by periods of expansion.

The macroeconomic theory distinguishes the economic cycle in the short-run, of the long-term trend. And, underlying to this separation is the idea taht the factors and causes of one of this phenoms are differents from the factors and causes of the other: the factors and causes that influence the economic trend are independent of those who provide its fluctuation around this same trend.
This distinction affects the conception  of the economic policies:
- for the short-run we have the cyclical stabilization, the monetary, exchange and budgetary policies;
- and for the long-run we have the structural policies;

But, how we determine the deviations that the economy is having around the trend? For this, the economic theory uses the tendential product, where the porductive resources are used in a "normal" rate:
- the unemployment rate is equal to the unemployment natural rate;
- the wages increases at the same proportion as the productivity;
- the installed production level would be aligned with the installed productive capacity, without excesses of supply or demand;

But, in the real world, the tendential product capacity rarely coincide with the observed product: there is a gap wich results of the difference between  the observed and the tendential product.

With this notion, its possible to observe the economic cycle:
- when the observed product is inferior than the tendential product, the economy is in recession: the unemployment is high and the growth rate is negative;
- when the observed product is higher than the tendential product, the economy is in expansion: the unemplyment is abnormally low and the wages increase above the labour productivity;

The lessons from History show that its inevitable the economy cross periods of expansion followed by periods of recession. But whu the economies need to face this cycle: wicj mechanisms lead them to deviate from the trend, and to return to the trend?

There are numeorus factores that can divert the economy from the equilibrium, and there are also many mechanisms that can turn back the economy to the equilibrium.
The modern economies are subject to numerous shocks or distrubances, that can be positives or negatives, as they tend to expand or contract the economic activity. They can occur on the side of the supply or on the side of the demand, and can be permanent or temporary.
These perturbations may divert the economy from this trend path of long-term, causing more or less lengthy periods of expansion or recession, because the adjustment of the economy doesn't happen instantaneously, and some economies could in the imbalance for a long time. For example:
- in the labour market, the wages don't adjust rapidly in order to balance the labour suplly (by the workers) with the labour demand (by the employers).
- in the market of goods and services, the companies do not automatically adjust the prices to the fluctuations in demand;

The macroeconomic theory points to several reasons/causes for this slowness in the adjustment. We can summarize them in three mais aspects:
- the existence of "costs menu": it's always difficult by some reason, to companies change their prices, neither wich is by the simple fact that they need to change their catalogs;
- the prevelance of adjustment mechanisms in prices and wages linked together. The changes in prices and in wages doesn't occur all at the same time: some agents change their preferences in one day, others in another, but they also compare their changes with the other agents. So, the changes are more gradual;
- The wages level may affects the workers productivity. An higher wage, may lead the worker to have greater reluctance to change of job, may lead to a selection of the best employees, and may also encourage a greater commitment to the profession;

Finally, it's worth mentioning that the recent developments in the macroeconomic theory shows that the distinction between trend and cycle may not be so distinct.
So, it seems inevitable that the economy suffers periods of crisis, because it is affected by disturbances that make it leave the equilibrium.