Charles Dunoyer and the Emergence of the Idea of an Economic Cycle

Abstract

This article shows that Charles Dunoyer sought to reinterpret Sismondi's theory of crises in a manner that would render it compatible with Say's political economy. While Sismondi considered that crises of overproduction proved the dysfunctionality of an economy founded upon free competition and called for legislative intervention, Dunoyer drew the conclusion that such economies were naturally subject to alternating periods of “activity” and “relapse.” Using the innovative idea of the cycle, Dunoyer incorporated Sismondi's theory into the Sayardian conception of political economy in which men have to adapt their behaviour to the nature of things, or suffer the consequences.