Graphical representations of Overstone’s cycle of trade.

In C. Gehrke, N. Salvadori, I. Steedman and R. Sturn (eds), Classical Political Economy and Modern Theory. Essays in Honour of Heinz D. Kurz, London: Routledge.

Overstone's celebrated description of the states through which trade periodically revolves is often interpreted as an early account of the business cycle. This impression is seemingly strengthened by some graphical representations of these phases in a circle. Yet neither Overstone nor the illustrators thought in terms of modern business cycle theories: their descriptions had starting and ending points, and aimed at illustrating the over-excitement following prosperity, leading to a crisis, and eventually the liquidation of the latter. They supplied no explanation of why the depression turns into a prosperity again. Their causal circle is interrupte, and their focus is on the recurrence of crises as periodic anomalies rather than on cycles as the 'normal' state of business.