  Power law distributions of macroscopic observables are ubiquitous in both the
natural and social sciences. They are indicative of correlated, cooperative
phenomena between groups of interacting agents at the microscopic level. In
this paper we argue that when one is considering aggregate macroeconomic data
(annual growth rates in real per capita GDP in the seventeen leading capitalist
economies from 1870 through to 1994) the magnitude and duration of recessions
over the business cycle do indeed follow power law like behaviour for a
significant proportion of the data (demonstrating the existence of cooperative
phenomena amongst economic agents). Crucially, however, there are systematic
deviations from this behaviour when one considers the frequency of occurrence
of large recessions. Under these circumstances the power law scaling breaks
down. It is argued that it is the adaptive behaviour of the agents (their
ability to recognise the changing economic environment) which modifies their
cooperative behaviour.
