A more recent writer, Ernst Mandel in his Long Waves of Capitalist Development (1980), opines that we are now living in the downswing of the fourth Kondratieff, which started in 1945 and reached its peak in the early 1970s. This coincides suspiciously with the post-war wage&spending-hiking labor shortage in 1945 and the restoration of the wage&spending-damping labor surplus of the Great Depression around 1970 as the now-grownup postwar babyboomers entered the job markets. Plus the Democrats started sporadically raising immigration quotas in 1967 to get more grateful voters, and housewives started jumping into the job market in the 70s to compensate for hubbies' missing payraises once the restored labor surplus plateaued and started weakening real wages.
An overview of these cycles is in the Kondratieff entry in Mark Blaug's Great Economists before Keynes (Wheatsheaf, 1986), p. 114-15. And David Kaiser in "Utterly at odds" on pp. E1-E2 of the 4/28/2002 Boston Globe says, "Some historians are beginning to focus upon 80-year cycles in American and world history.... In the United States, the founding of a republic divided by the issue of slavery in 1788 eventually made the Civil War inevitable. The outcome of that war, in which the North reestablished the Union but eventually allowed the Confederates to maintain white supremacy, laid the foundation for the civil rights struggles that began in the 1950s. ... In the last 10 years, we witnessed the disintegration of Yugoslavia, Czechoslovakia, and the Soviet Union - all creations of the First World War that had lasted 75-80 years."
The worktime economics view is that the real basis of the long cycle has been missed - because it's too obvious: Every 60-70 years the wealthy get stupid, start assuming that little ol' them couldn't possibly hurt the big gigantic infinite impervious invulnerable Economy, so they accelerate their lobbying for, and lobbying success in, changing all the little money sprinklers on the lawn of the economy from spray to stream and pointing them up to themselves. They concentrate media ownership and retail the "truism" that you can give ANY percentage however large of the money supply to ANY percentage however small of the population and things will only get better faster because those trillions get Right Back To Work Creating Jobs. (The rebuttal being, of course: we DID that all through the Bush regime so WHERE ARE THE JOBS?)
Then purty soon, hey presto! RECESSION - or worse ... the now verboten &redefinedtobeimpossible D-word (depression).
Also, the real basis of the long cycle has been missed because it's too humbling in the same sense in which the Copernican theory (we're not the center of the solar system let alone the universe) was humbling relative to the Ptolemaic theory (we were the center). TPTB (the powers that be) assume that they, the financial sector, are more important than they are = they assume they are the positive basis of the economy. The reappearance of depression reminds them that they are not; the consumer base is - it's not called the consumer BASE for nothing - and it's based on the employment basement. Why? Think about 6 WalMart heirs owning as much as "the bottom" hundred million Americans. Do you imagine that those six individuals spend anything like the same percentage of their money as those 100 million? No way. And yet, spending is the circulation of the economic blood supply. Money is the blood of the economic organism. Would you want to coagulate 20-30% of your blood in your brain? Then wake the hell up: Wealth is a huge problem, not a big solution. Not a worthy goal. Not a valid yardstick of anything except maybe stupifying obsession. The old phrase, "If you're so smart, why ain't you rich?" should actually be reversed: "If you're so smart, why ARE you rich?!"
On the other hand, the opposite is also true: the wealthy financial sector IS more important than they think in terms of the negative basis of the economy, because the percentage of the money supply they gradually amass eventually increments quite within the same scale as the overall economy, which thereupon becomes stops being infinite-impervious-invulnerable and becomes instead quite finite, pervious and vulnerable. The brain (decision-making function) of the economic becomes compacted and bloated to the point of explosion, while the rest of the body economic atrophies for lack of blood supply. And this process is probably like the blockage of a cardio artery: it is an exponentially accelerating process, because we're got a certain circumference of the artery that is getting closed in with cholesterol-plaque 360% inwards. A non-mathophobe could easily calculate the exponentiating diminishment of the open area in the middle, a valuable informative metaphor for the clogging-up of an economy, here presented (as far as we know) for the first time (10/06/2012/ph23) but hopefully not the last.
The mechanism of the long wave is interesting. A balance between the supply of labor and the supply of jobs is usually perceived by employers as a shortage, because it "forces" employers (by market forces) to increase wages and concessions instead of "forcing" them to implement layoffs. As wages rise, wealth centrifuges out of its extreme concentration among the rich. As wealth centrifuges and passes into the hands of the middle and lower classes who tend to spend it more quickly and in smaller amounts, the velocity of money rises and the multiplier effect cuts in. A law of the increasing marginal efficiency of centrifuged wealth operates to accelerate the economy. "A rising tide lifts all boats," eventually even those of the rich - but in healthy proportion to the volume and speed of circulating money.
As peacetime prolongs, however, a surplus of labor gradually arises due to births, immigration, imports, technology, and/or banking manipulations (e.g., interest rates) and the bargaining power of labor erodes, and with it labor's favorable wages and concessions. Wealth gradually reconcentrates in the fewer pockets of the upper income brackets and the law of the diminishing marginal efficiency of concentrated wealth operates to slow the economy. "The more concentration, the less circulation." A falling tide grounds all boats, eventually even those of the rich. [Note the linguistic discovery techniques at work here - gap in paradigm and paradigm completion. We have articulated a hitherto non-extant opposite for two established statements - the marginal efficiency of wealth and the rising tide's effect on all boats.]
The mechanism of the expansion is "demand driven" or rather evoked. It's a powerful pulling process rather than a pushing process, and as Bucky Fuller was fond of pointing out, pulling is much stronger and more efficient and varietous. A balance between the core markets of labor and employment evokes a healthy demand in all other markets. And that demand evokes supply of a great variety of goods and services.
Hyde's view integrates the notion that "wars are good for economies" in the sense that wars (occasionally replaced or supplemented by plagues) periodically cut the labor supply and restore a balance between labor and employment. The hallmark of this balance is a deconcentration of wealth and an acceleration in the velocity of money. Wars (and/or plagues) function to cut labor surplus in three ways -
As the 1990s wind to a close, culture is again allowing workweek shortening.
The concentration evokes war by starving the markets away from its own investment targets. On one side this increases dissatisfaction and "nothing to lose" attitudes on the part of the workforce, especially the young males, more and more of whom are excluded from a good living and marriage and family. On the other hand it increases frustration among big investors who have nothing market-supported to invest in - except - "What if we had a huge war...." So war is motivated on all sides of the domestic economy, and the population throws a considerable proportion of its most aggressive and powerful elements (young males) into maximum risk of being killed. Hey, we "kill three birds with one stone" -
Bottom line, there's no Kondratieff in the sense of an automatic or necessary ascent after a concentration-borne descent. Ascents have been pushed from outside by Malthus' "active constraints" such as wars and plagues. For further on this, see our economic design page. For more details in general, our layperson's handbook, Timesizing, Not Downsizing, is available at bookstores in Harvard Square, Cambridge, Mass., USA or from *Amazon.com online.
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