Every now and again – most recently in the excellent Does Capitalism Have a Future?, featuring a star casting of Wallerstein, Collins, Mann, Derluguian and Calhoun – I come across references to Kondratiev waves. Maybe it’s age but I often forget its detail. So I thought a blog to remind myself, and possibly others, might be helpful.
Many people, including economists and economic historians, are understandably sceptical about a claim that there exist detectable long waves or cycles. After all, statistical patterns can be interpreted every which way. It was Soviet economist Nikolai Kondratiev in the mid-1920s who most seminally asserted the existence of such waves (and it was Schumpeter who named these after Kondratiev in the 1930s). The reason the concept still has purchase is because the statistical patterns seem to have retained their resonance. Hobsbawm, for example, admitted that ‘there is something in them, even if we don’t know what’.
So what are they? Focusing particularly on prices and interest rates, Kondratiev discerned three phases in the wave/cycle: expansion, stagnation and recession. Since his time others have added a fourth phase – collapse – located between the first phase of expansion and the second of stagnation. In the 1920s Kondratiev maintained that there had been three cycles during the nineteenth century:
• 1790-1849, with a turning point in 1815
• 1850-1896, with a turning point in 1873
• a new cycle started in 1896.
What about causal and effect? Kondratiev waves represent causes and effects of recurring capitalist phenomena, and Kondratiev remained non-committal.
Contemporary versions have emphasized ‘inequity’ as a principal driver of Kondratiev waves (for example, when global economic troubles and panics occurred in the early 1890s, and governments made insufficient attempts to address inequity, there followed a number of significant rebellions/revolutions which some claim culminated in WW1). Tilley has contended that when opportunity diminishes and inequity grows towards the end of a wave deep recessions and depressions precipitate either war or revolution in approximately 20% of instances.
More recently two other candidates have attracted attention: ‘technology’ and the ‘credit cycle’.
Unsurprisingly there is less than unanimity in identifying the potential role of technology or of technology cycles.
In recent contributions Smihula has discerned six long-wave cycles within modern capitalist formations, each of them preceded by a technological revolution:
• industrial revolution – 1771
• age of steam and rail – 1829
• age of steel and heavy engineering – 1875
• age of oil, electricity, cars, mass production – 1908
• the age of information and telecommunications – 1971
Smihula has argued that each new cycle is shorter than its predecessor as new technologies emerge ever faster. Each wave has an ‘innovation phase’ (that is, a technological revolution) and an ‘application phase’ (that is, a phase in which new technologies are bedded in and exploited).
So something appears to be ‘going on’ statistically, though, as is often true of the social sciences (which where Piketty rightly argues economics should accept it belongs), there are many rival theories and interpretations. To return to the beginning of this attenuated blog, macrosociology feeds off data like these. To deploy a phrase I tend to over-use, they are grist to the mill of sociology. Returning to the book I cited at the outset, Wallerstein accords credibility to Kondratiev waves/cycles, and suggests that, in comparison, ‘hegemonic cycles’ – namely, the ability of one state to impose its rule on all other states – are longer. He gives a reason for this. Capitalism, his thesis asserts, is a world-system, larger by definition than any single state. It is only if capitalists are located in a ‘world economy’, ‘one that has a multiplicity of states within it’, that entrepreneurs can chase the endless accumulation of capital: ‘ … the imposition of relative order by a hegemonic power is a positive benefit for the ‘normal’ operation of the capitalist system as a whole’ (as well as for the hegemonic state). But hegemony is not so easily achieved: indeed it is rare. This is because hegemony does not always work to the benefit or advantage of non-hegemonic states, and hence generates tensions.
So, as is usually the case, statistics don’t wrap things up but they do afford vital clues as to what is happening and why. Kondratiev’s pioneering studies, and those of successors like Smihula and Tilley mentioned in passing here, continue to be accepted as significant cues by many a serious social scientist.