The End of the Business Cycle

of continuing and sometimes enormous fluctuations in economic activity. Business cycles?expansions and contractions across most sectors of an economy?have come to be taken as a fact of life. But modern economies operate differently than nineteenth-century and early twentieth-century industrial economies. Changes in technology, ideology, employment, and finance, along with the globalization of production and consumption, have reduced the volatility of economic activity in the industrialized world. For both empirical and theoretical reasons, in advanced industrial economies the waves of the business cycle may be becoming more like ripples. The dampening of the business cycle will change the global economy and undermine assumptions and arguments that political econo mists use to understand it. "History counsels caution," Alan Greenspan warned the Senate banking committee in February 1997, about "visions of such new eras' that, in the end, have proven to be a mirage." Greenspan is surely right to warn against too easily ac cepting that the present is fundamentally different from the past,