Quotes
Kondratieff’s theory assumed that the rhythms of capitalism exert a one-way gravitational pull on the non-capitalist world. In fact, the two constantly interact, and any synthetic version of Kondratieff’s theory would have to take account of that.
He believed that the emergence of regular wave-patterns from random events was real15 – not just in economics but in nature:
It seems probable, that an especially prominent role is played in nature by the process of moving summation with weights of one kind or another, where the magnitude of each consequence is determined by the influence, not of one, but of a number of the preceding causes, as for instance, the size of a crop is determined, not by one day’s rainfall, but by many.16
In other words, raindrops fall randomly into a square kilometre, but at the end of the season you have a crop yield that you can measure against last year’s. The cumulative impact of random events can produce regular, cyclical patterns.
By the time Slutsky wrote this, Kondratieff was becoming dangerous to know. In 1927 conflicts within the Soviet bureaucracy erupted into expulsions and street fighting. Historian Judy Klein points out that it would have been easy for Slutsky to disown Kondratieff, who was under suspicion as an avowed market socialist. Instead, he supported Kondratieff’s basic theory.17
In fact, Slutsky’s experiment added a crucial insight to long-wave theory. He noted that waves generated by filtering random data do not repeat for ever. As he computed them over time, the patterns would suddenly break down, an event he dubbed ‘regime change’: ‘After a more or less considerable number of periods every regime becomes disarranged, the transition to another regime occurring sometimes rather gradually, sometimes more or less abruptly, around certain critical points.’18
To anybody interested in the long-range patterns in economics, the challenge posed by Slutsky’s observation is clear. First, long waves may not be traceable to a tangible cause – whether it be innovation, external shocks or the rhythms of capital investment. They may just be a regular feature of any complex economic system over time. Secondly, whatever the cause, we should expect regular wave patterns to break down and reset themselves.
Slutsky himself believed this pattern of sudden breakdown could operate at two levels: inside the ten-year business cycle and across the fifty-year long cycles. But his work raises a third possibility. If industrial capitalism has produced a sequence of fifty-year waves over a period of more than 200 years, then maybe at some point this too breaks down, inaugurating a regime change that leads to a whole different pattern.
It seems probable, that an especially prominent role is played in nature by the process of moving summation with weights of one kind or another, where the magnitude of each consequence is determined by the influence, not of one, but of a number of the preceding causes, as for instance, the size of a crop is determined, not by one day’s rainfall, but by many.16
In other words, raindrops fall randomly into a square kilometre, but at the end of the season you have a crop yield that you can measure against last year’s. The cumulative impact of random events can produce regular, cyclical patterns.
By the time Slutsky wrote this, Kondratieff was becoming dangerous to know. In 1927 conflicts within the Soviet bureaucracy erupted into expulsions and street fighting. Historian Judy Klein points out that it would have been easy for Slutsky to disown Kondratieff, who was under suspicion as an avowed market socialist. Instead, he supported Kondratieff’s basic theory.17
In fact, Slutsky’s experiment added a crucial insight to long-wave theory. He noted that waves generated by filtering random data do not repeat for ever. As he computed them over time, the patterns would suddenly break down, an event he dubbed ‘regime change’: ‘After a more or less considerable number of periods every regime becomes disarranged, the transition to another regime occurring sometimes rather gradually, sometimes more or less abruptly, around certain critical points.’18
To anybody interested in the long-range patterns in economics, the challenge posed by Slutsky’s observation is clear. First, long waves may not be traceable to a tangible cause – whether it be innovation, external shocks or the rhythms of capital investment. They may just be a regular feature of any complex economic system over time. Secondly, whatever the cause, we should expect regular wave patterns to break down and reset themselves.
Slutsky himself believed this pattern of sudden breakdown could operate at two levels: inside the ten-year business cycle and across the fifty-year long cycles. But his work raises a third possibility. If industrial capitalism has produced a sequence of fifty-year waves over a period of more than 200 years, then maybe at some point this too breaks down, inaugurating a regime change that leads to a whole different pattern.
In 2010, the Russian researchers Korotayev and Tsirel did just that.20 They used a technique called ‘frequency-analysis’ to show convincingly that there are powerful fifty-year pulses in the GDP data. For the post-1945 period, they show that even the raw data contains clear evidence of an up phase after 1945 and a prolonged down phase beginning in 1973.
In fact, using the IMF’s definition of recession (six months during which global growth dips below 3 per cent), they calculate that, while there were no recessions for the period 1945–73, there have been six recessions since 1973. They are confident that the Kondratieff wave is present in world GDP figures after 1870, and observable in Western economies before that.
In fact, using the IMF’s definition of recession (six months during which global growth dips below 3 per cent), they calculate that, while there were no recessions for the period 1945–73, there have been six recessions since 1973. They are confident that the Kondratieff wave is present in world GDP figures after 1870, and observable in Western economies before that.
fb2epub
Drag & drop your files
(not more than 5 at once)