Posts Tagged ‘cycles’
“If you would define the future, study the past”*…
The global economy and living standards have, Rafael Guthmann suggests, have had three “supercycles” of rise and fall over the past 4,000 years…
Economists often state that economic growth simply did not exist before recent times. The orthodox view that I was taught as an undergrad is that sustained economic growth began in the late 18th century. This view is articulated by economic historians like Clarke (2007). DeLong (2022) goes even further. He claims that modern economic growth only began in earnest in 1870, with the growth from 1770 to 1870 being very small in comparison, and that there was absolutely no growth in real incomes for ordinary people before 1770 (but he admits that living standards could have varied over pre-modern history for a tiny elite).
The data, however, shows that this model of economic history is plain wrong. Instead, over the last four thousand years, we can identify that there have been three major very-long-run economic cycles in the Western world that featured increasing incomes and then very long periods of decreasing incomes. These cycles of expansion and contraction lasted for several centuries.
As described by Bresson (2016), the first cycle corresponded to the rise and fall of Bronze Age civilizations, such as the Minoan and Mycenean cultures in Greece, the first literate civilization in Europe which developed writing around 2000 BC and collapsed towards the end of the 2nd millennium BC. The second cycle corresponded to the rise of Classical Greco-Roman civilization over the 1st millennium BC and its collapse during the 1st millennium AD. The third and present cycle began in the late 1st millennium AD and continues today. In this wider context, the industrial revolution beginning in the late 18th century was just an acceleration of the rate of economic development of the third cycle and did not really represent a discontinuity with past economic history…
He makes his case: “The Great Waves in Economic History,” @GuthmannR. (Note that, if one includes, for example, the long histories of the Chinese and African economies, the pattern of cycles of development and decline is further reinforced.)
* Confucius
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As we contemplate cyclicality, we might recall that it was on this date in 12 CE– in the middle of the second wave identified above– that the Roman emperor Augustus (AKA, Caesar Augustus, Caesar, and Octavian) was named Pontifex Maximus (chief high priest of the College of Pontiffs (Collegium Pontificum) in ancient Rome, this was the most important position in the ancient Roman religion), incorporating the position into that of the emperor.
“Civilization is a movement and not a condition, a voyage and not a harbor”*…
It can seem, in this chaotic world-moment, that Huntington’s Clash of Civilizations is having a day. Nathan Gardels introduces a new series of essays in Noema that examine the prospects for rise and fall in our time…
“The intelligible unit of historical study,” Arnold Toynbee famously wrote, is neither the nation-state nor mankind as a whole, but civilizations that grew out of societies that evolved toward dominance of their “known world,” or stalled in isolation and fell into obscurity, depending on challenges to which they rose in response or that defeated them.
Writing his “Study of History” in the mid-20th century, he counted some 22 such civilizations that had arisen over the last 6,000 years, from the Mayan to Hindic to Sinic and Hellenic among many others. Each saw its foundation in a religious or cosmological outlook that shaped its internal cohesion through the form of the life of a society, its style of life, moral taste, form of government and spirit of laws.
For Toynbee, as the political scientist Robert Loevy has put it, “often one nation-state is the most powerful leader in the Civilization and comes to dominate it and symbolize it. After a lengthy period of domination, the Civilization falls, the world goes into a state of low-level organization, and humanity waits for the next Civilization to emerge and the cycle to begin anew.” Inevitably, as Toynbee saw it, creative elites become complacent in their success and fail to meet new challenges, both internally and from the outside.
Oswald Spengler, another philosopher of history most known for his book, “The Decline of the West”, similarly argued that the dominance of a civilization always diminished as the creative impulse that propelled its rise waned, overcome by “critical impulses” that destroyed the internal cohesion that sustained it.
These reflections are obviously relevant today as Vladimir Putin’s Russia and Xi Jinping’s China push back against the liberal world order led by the United States that has dominated the “known world” for the last eight decades following the West’s four-century rise.
Since they frame their challenge as “civilizational states” reasserting their historical identities anew, the question arises whether that challenge will defeat the West or serve to revitalize it by compelling a fresh creative response that both renews its internal cohesion and resists the hegemony of others.
Over the next weeks, Noema will address these issues in a running symposium of authors from West and East…
Clashes and cross-pollination: “The Cycle Of Civilizations,” a series eminently worth following in @NoemaMag.
* Arnold Toynbee
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As we work out world order, we might recall that it was on this date in 1865 that President Abraham Lincoln signed the 13th Amendment, abolishing slavery and involuntary servitude (except as punishment for a crime).
On this date in 1960, the Greensboro Sit-Ins began. Four freshman at North Carolina A&T— Joseph McNeil, Franklin McCain, Ezell Blair Jr., and David Richmond, the “Greensboro Four,” as they came to be known– took seats at the lunch counter at the “Whites only” lunch counter of the F.W. Woolworths in downtown Greensboro. Followers of Martin Luther King, Jr., theirs was a non-violent protest– the Greensboro sit-ins grew (on February 4, more than 300 people took part) and lasted until July 25. On that date, after nearly $200,000 in losses ($1.8 million in 2021 dollars), and a reduction in salary for not meeting sales goals, store manager Clarence Harris asked four black employees, Geneva Tisdale, Susie Morrison, Anetha Jones, and Charles Bess, to change out of their work clothes and order a meal at the counter. They were, quietly, the first to be served at a Woolworth lunch counter. Most stores were soon desegregated.
The International Civil Rights Center & Museum in Greensboro contains the lunch counter, except for several seats which the museum donated to the National Museum of African American History and Culture in 2016 and a four-seat portion of the lunch counter acquired by the Smithsonian Institution in 1993, displayed in the National Museum of American History.
“Speculative bubbles do not end like a short story, novel, or play… In the real world, we never know when the story is over”*…
Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages is a hugely-influential book by Carlota Perez that suggests a connection between technological development and financial bubbles. which can be seen in the emergence of long term technology trends. She explicates her model by tracking repeated surges of technological development over the past three centuries, from the Industrial Revolution to the Information Age.
Written almost 20 years ago, it contained an implicit projection of where we would be today…
For this first stab at determining just when and where we are, we’re looking at 2002’s Technological Revolutions and Financial Capital, by Carlota Perez. One of the great economists of our time, Perez is a leading thinker on technology and socio-economic development. Her book outlines a four-phased financial cycle depicting the archetypical sequence of capital deployment and market traction for a major technological revolution. In this post, we’ll dig into Perez’s cycle and discuss where we sit today in 2021…
“Where Are We? Part 1: Bubbles, Bubbles, Toils, and Troubles“: Annika Lewis (@AnnikaSays) and David Phelps (@divine_economy) apply Perez’s principles in an attempt to figure out where we are and what our future might hold– the first in a series of attempts to break down economic theorists to try to figure out where exactly we are in a cycle.
* Robert Schiller
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As we reset our sextants, we might recall that it was on this date in 1927 that the 15 millionth– and final– Model T rolled off of the Ford assembly line… effectively marking the end of the beginning (the “transition phase”) of the cycle that Perez calls the “age of oil, automobiles, and mass production.”
“The past is not dead. It is not even past.”*…
In 1943, as American businesses tried to guess whether wartime relief from the Depression would translate into postwar prosperity, the Tension Envelope Corporation printed this chart for customers. The infographic folded into a pamphlet and could be displayed on the wall when opened. (The online archive of the Federal Reserve, FRASER, has digitized a PDF of the pamphlet, which you can view here.)
The infographic and the explanatory text below it tap data from several sources, including U.S. Treasury reports, the Department of Labor’s Bureau of Labor Statistics, the Survey of Current Business, and the Committee for Economic Development, a nonprofit founded in 1942 to help American business plan for the postwar future. Excerpted text from a Committee for Economic Development publication, “Business Planning Now for V Day,” can be found in the lower left-hand corner of the chart.
In an explanatory section on the federal debt—represented on the chart as a red line that climbs steeply upward beginning in 1941—the chart’s authors articulate a strong stance on what could be an alarming indicator: “The necessary cost of this war is not important. Victory is worth the price. Whatever the cost to the future citizens is, they will get their money’s worth in benefits derived.”…
From the redoubtable Rebecca Onion: “A Comprehensive 1943 Infographic of American Booms and Busts.”
* William Faulkner
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As we reach for the Dramamine, we might recall that it was on this date in 1969 that Chemical Bank installed the first ATM in the U.S. at its branch in Rockville Centre, New York. In fact, as noted here before, the ATM was imagined (and an early version patented) in 1960 by Luther George Simjian; but a six-month trial of the stand-alone device in 1961 was a failure. A British version (developed by the banknote company Delarue and deployed by Barclays) debuted in 1967, but required the use of pre-acquired “cheques” for withdrawal. The Chemical ATM was the first of the breed that is now common: networked machines that communicate with the bank (and its account information) in real time.
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