Using these terms, then the function, $f$, may be approximated by

$$f(x) = \frac{a_0}{2} \sum_{n=1}^{\infty} \left[ a_n \cos(nx) + b_n \sin(nx) \right].$$

Thus, any function may be approximated by a sum of trigonometric functions. This is a powerful result. For example, as presented in Tolstov (1962), we may write that the trivial function, $y = x$, thus:

$$f(x) = x \sim 2 \left( \sin(x) - \frac{\sin(2x)}{2} + \frac{\sin(3x)}{3} + \dots \right).$$

This is illustrated in Fig. 8, below.

<figure><img src="image_25.png" /><figcaption>Fig. 8. The function $y=x$ expressed as a sum of periodic functions</figcaption></figure>

## 5.2. Spectral analysis and Kuznets, Kondratieff, and other Waves

The mathematical implication is that for any time series, a sequence of periodic functions may always be found that add up to approximate the original time series. The above mathematical fact does not, in and of itself, imply that there is any actual or other interpretation of this equivalence. In other words, the fact that there is a mathematical equivalence does not imply that there are real phenomena that exhibit the same characteristics. Nonetheless, it does not imply the reverse either, that is that there may be periodic behavior lurking behind some phenomena. In this case, Fourier analysis could be useful in teasing out the details.
Mankiw (2008) states flat out that there are no regularities in economic phenomena. Garrison (1989) states that Kondratieff waves are a product of ‘creative empiricism’ and equivalent to the fanciful shapes, for example, the head-and-shoulders or candle sticks, of technical stock traders – and have ‘no basis whatever in theory’. However, he later modifies this position to allow for wave-like phenomena that have some structural basis.

In fact, as we have shown above, economists have much reason to suspect that the latter is the case. They have long recognized periodic phenomena of both long and short periods. Business cycles are but one example, which are easily detected and found in data. Thus, it is not unreasonable to replicate the stylized facts of economic phenomena by suggesting that it is, in fact, the combination of a number of periodic phenomena. This has the advantage of reducing observable phenomena to other phenomena already explained.

Kondratieff waves, described in the previous sections, are cycles that alternate between periods of high growth, with rapid price rises, and periods of relatively slow growth, with falling prices. Regardless of the existence of the illustrated sequence of historical events, it remains controversial if there is, in fact, any fundamental periodic phenomenon of which these facts are manifest. However, recently, as we have outlined in the above sections, a number of researchers have found evidence for such waves.

A number of arguments against this include: (1) the fact that even though certain types of human events tend to recur, people learn from their mistakes and some expectations of cycles may smooth them out. Also, (2) the types of production and investment change over time, (3) long waves are hard to verify empirically, (3) we have shown (see Section 3) that there may be different mechanisms working for cyclical behavior at different time scales, and, lastly, (4) Fourier's theorem shows one can always find waves in any data set (even in a data set generated by random numbers).

Although Korotayev and Tsirel (2010) find evidence not only for Kondratieff waves, but also for Kuznets swings, Juglar cycles, and Kitchin cycles. Without going into too much detail, suffice to say that each of these periodic phenomena are characterized by different frequencies and amplitudes. Thus, it is no surprise (see argument 4 above) that analysis of data will show, with suitable adjustments/calibration, that the data series can be replicated by a sum of periodic functions.

Korotayev and Tsirel (2010) use spectral analysis in their research. They study world GDP growth rates and prices going back over 100 years. The particular form of spectral analysis they use is adapted to time-series. In this technique, the time-series is analyzed ‘based on the assumption that a broad class of aperiodic natural, technical, and social processes may be represented as sums
of random process with stationary increments of different orders'. Now alt-
hough this seems natural enough, and, in fact, given what we know about Fou-
rier Series, must be mathematically true, the problem with the reasoning is this:
we are assuming, in some sense, that what we want to find is already there; and
then we go and find it. On the other hand, in any sort of modeling, one general-
ly assumes some sort of structural relationship and then considers empirical
data to see if there is evidence that supports it. Some might criticize the method
of Korotayev and Tsirel because the period of the Kondratieff waves in their
research has a period of around 50 years. Thus, no more than three complete
cycles could exist in their database.

However, their approach is statistical, not a simple Fourier decomposition,
and it has been shown that, even with such a small sample, the test statistic fol-
lows an x² distribution. Thus, they obtain low p-values for those components
with periods of approximately 50 years (Kondratieff waves; p = 0.04), periods
of around 8 years (Juglar cycles, p = 0.025), and periods of close to 3.5 years
(Kitchin waves, p = 0.025). With such p-values, most statisticians would accept
the presence of these cycles. The key arguments regard the interpretation of
historical economic and political events. Note that Korotayev and Tsirel prefer
to regard Kuznets swings as harmonic elements of Kondratieff waves, rather
than as a separate cycle.

**5.3. Other methods of cycle detection**

Another issue that comes up in Korotayev and Tsirel is the pre-processing of
data. For example, in addition to eliminating the years of the two world wars,
(1914–1919, 1939–1946), they also have ‘replaced all the values for the period
between 1914 and 1946 with geometric means (1.5 % per year)’. This seems
a rather extreme and arbitrary replacement. If cycles are to explain economic
behavior, only limited adjustment of the data should be permitted. Further, in
the second more radical departure from the actual data, ‘the values for years
between 1914 and 1946 were replaced by the mean value (3.2 %) for the whole
period under study (1871–2007), that is, those values were actually excluded
from the spectral analysis’. Thus, it seems to bring into question as to what, in
fact was being analyzed.

Additionally, we believe that a wiser course would have been to follow
a more robust method of analysis – one that does not require such a large de-
gree of pre-processing. For example, in Gallegati *et al.* (2011) a wavelet ap-
proach is used to determine the factors that effect output with considerations of
size, scale, and time.

The key issue in the empirical analysis is the fact that there may be cycles
of different times scales. This leaves open the possibility that they may amplify
or counteract each other. For example, Kondratieff cycles in output and prices are estimated to have periods of around 45–60 years; Kuznets infrastructure cycles have periods of around 25 years; Schumpeter's ‘innovation’, 50 years, the Goodwin cycle of maybe 20 to 30 years, and Keynes–Kaldor–Kalecki cycles of demand: 7–9 years. Thus, the empirical analysis needs to be able to verify these cycles.

Wavelet analysis is similar to and sometimes more accurate than traditional spectral analysis because it uses short ‘wavelets’ instead of infinite periodic functions. In contrast to the Fourier analysis, wavelet analysis deals with the signal at varied frequencies with varied resolutions. Instead of the fixed time-frequency results of the Fourier analysis, the wavelet method provides excellent frequency resolution at low frequencies and good time resolution at high frequencies. Thus, this methodology allows both time and frequency to vary in time-frequency plane, but also the mechanisms driving those cycles.

In Gallegati *et al.* (2011), a wavelet approach was used to analyze the time series data underlying the Phillips curve.<fnref n="11" />

Thus, wavelets provide a good method to see relationships on different time scales and allow one to disentangle what drives output at different time horizons. Wavelet variance and cross-correlation methods can be used to determine leads and lags in time series and how different time scales affect them. This is likely to be a better approach to cyclical analysis of macroeconomic time series.

Yet another methodology for the decomposition and filtering of time series is the technique of penalized splines (see Kauermann *et al.* 2011). Here, a time-series is decomposed into a smooth path and a series of residuals, which are assumed to be stationary around the trend. This technique is robust with regard to correlation of residuals. The residuals exhibit business cycle features. Splines are basically a type of smoothing, using basis functions, in which piece-wise polynomial functions are joined together to form a ‘smooth’ shape. Then the ‘smoothed’ shapes or periodicity and other features can be studied more easily than the original data-stream. In their paper, Kauermann *et al.* discuss several sub-methodologies including the Hodrick-Prescott (HP) Filter and the Bandpass (BP) Filter; these are contrasted with the method of penalized spline. They study GDP and its components from 1953 to 1996.

We see that there are a variety of approaches to the identification of cycles within time series methods. Each of them has some advantages and disadvantages.

<footnote n="11">¹¹ Note that Goodwin uses such a Phillips curve but assumes a constant productivity growth rate and real variables.</footnote>
**5.4. Some empirics on the Goodwin cycle**

Other analysis, for example, Flaschel *et al.* (2008) show how cyclical behavior
can appear as Goodwin cycles, based upon predator-prey dynamics as dis-
cussed in Section 3.5. In their case, they show how, with suitable assumptions
about the wage-price spiral and certain other variables, a Lotka-Voltera type of
model gives rise to periodic phenomena, as explained in Section 3.5 above.
In this case, the ambiguities are only pushed into the background, that is into
the parameters and structure of the pair of differential equations that give rise to
the dynamical system. In other words, it is not in question if the system they
develop gives rise to periodic behavior, it does. The question is whether the
system is well-grounded in the empirics of the variables being used.

At this point, we do not seek to advocate for or against the existence of
wave-like phenomena in economic behavior. Instead, we only wish to point out
two things: (1) Fourier's theorem guarantees that one can find a set of waves
which fully simulate any curve; (2) there is a fundamental ambiguity about the
nature of the economic behavior being explained with respect to frequency,
amplitude, etc. as there is sufficient freedom for interpretation of virtually any
periodic phenomena as 'economic' phenomena.

An empirical test of the cyclicality of synthesis of the Goodwin and
Keynes-Kaldor models is given in Flaschel *et al.* (2008). Often the Goodwin
model has been interpreted as business cycle dynamics, but as Flaschel *et al.*
(2008) show, the employment and wage-share dynamics seems to hold more
for a longer time scale, where the wage-share movement can be found to be
related to a large time scale with a delay.

Employment seems to lead the change of the wage-share in the context of
long waves (see Fig. 9).

<figure><img src="image_26.png" /><figcaption>Fig. 9. U.S. Goodwin cycles</figcaption></figure>

In examining business cycles, we note there is some negative correlation be-
tween employment and wage share. This interaction appears to come less
from real wage movements, but rather from pro-cyclical productivity move-
ments. As to the longer time scale – here captured by the thin solid trend
line – as it is shown in Fig. 9, there seems to be a strongly delayed reaction.
With employment rising, wage shares seem to rise with a delay, and as wage
shares continue rising, employment seems to fall with a significant delay.
Most of our current cycle models – on short or long scales – do not exhibit
such delays.

**5.5. Some empirics on the Minsky cycle**

The period 1981–2007 provides evidence from the U.S. economy that is strong-
ly supportive of the idea of a long Minsky cycle. The Minsky basic cycle em-
bodies a sentiment-based theory of the business cycle (see also Semmler and
Bernard 2012). The tranquil period generates increasingly greater risk taking as
agents become progressively more optimistic. That optimism manifests itself in
increasingly optimistic valuations of assets and associated revenue streams.
It also manifests itself in credit markets where both borrowers and lenders be-
come more optimistic. That is critical because it means lender-imposed market
discipline becomes progressively weaker. Leveraging increases but the usual
text-book scenario of corporate finance, whereby higher leverage implies
a higher risk premium, is not visible in the cost of credit. Instead, credit remains
cheap and plentiful.

Fig. 10 shows the ratio of home prices to rents during the period from
the 1960s to 2006. Since 1999, the ratio suddenly starts to increase. Such a de-
velopment would be consistent with a dramatic drop in interest rates, thereby
generating a large increase in the present value of anticipated rents. However,
that did not happen. Instead, the increase in home prices relative to rents was
driven by speculative anticipations of higher resale values. This corresponds
exactly with the Ponzi phase of the basic Minsky cycle in which agents borrow
to finance asset purchases in anticipation of higher resale values.
<figure><img src="image_27.png" /><figcaption>**Fig. 10.** Ratio of home prices: Rents</figcaption></figure>

Fig. 11 shows nominal mortgage rates over the period 1971–2008. The figure shows that nominal mortgage rates rose sharply in the 1970s through to 1981, and then fell steadily through to 2002. Under ‘normal’ circumstances, it would be surprising to see a simultaneous increase of mortgage interest rates and the home price to rent ratio. However, the 1970s and early 1980s were a period of stagflation – rapid inflation plus relatively high unemployment. The rise in the home price to rent ratio can therefore be explained by the combination of increased demand for hard assets that are more protected against inflation and lowered rents attributable to a weak economy. With regard to the Minsky cycle, the main feature of interest in Fig. 11 is that mortgage interest rates remained roughly constant over the period 2002–2007. This was a period when the bubble in house prices had already set in and buying homes therefore involved larger mortgages.

Yet, despite this, there was no increase in risk premiums, reflecting the increased optimism and complacency of lenders.
<figure><img src="image_28.png" /><figcaption>Fig. 11. Historical mortgage rates</figcaption></figure>

Two further pieces of evidence consistent with the Minsky basic and super cycles are provided in Figs 12 and 13. Fig. 12 illustrates the percentage of disposable income devoted to servicing debt for the period 1980–2007. This is a fairly good proxy of risk since the lower the percentage of disposable income a borrower needs to pay (i.e. the lower the debt service burden), the less risky is the loan. Fig. 12 shows a cyclical pattern, with the debt service burden rising in the expansion of the 1980s and then falling when the economy went into recession. It rose again with the expansion of the 1990s, briefly flattened at the end of that expansion, and then continued increasing in the 2000s. This pattern is consistent with the interaction between the basic Minsky cycle and the Minsky super-cycle discussed earlier.

The basic cycle is evident in the expansions of the 1980s and 1990s, but by the 2000s the old thwarting institutions had been rendered obsolete and the economy enters a period of unsustainable boom that ends with a financial crisis.

During this last period, leverage increases massively but there is no increase in interest rate risk premiums because lender discipline was in tatters owing to the spread of optimism amongst lenders that weakened market discipline.
<figure><img src="image_29.png" /><figcaption>Fig. 12. Debt service to disposable income ratio</figcaption></figure>

Fig. 13 shows the volume of funds in collateralized debt obligations (CDO) over the period 1992–2002. Collateralized debt obligations are financial assets constructed by bundling smaller loans. The interest and principal on these loans are paid to a trust entity, which then divides those payments among CDO owners. Distributions from the trust entity may also be *tranchered*, with less risky CDOs receiving payment first and more risky CDOs receiving the remaining income. Mortgage-backed securities (MBS) represent a specific type of CDO backed by home mortgages.

As discussed earlier, an important ingredient of the Minsky super-cycle is financial innovation that escapes the regulatory net, permits increased risk-taking, and encourages financial complacency. CDOs represent such an innovation. The bundling of loans in CDOs enabled banks and other lenders to sell their loan portfolios and thereby off-load risk. This created the ‘originate and distribute’ model whereby banks and other lenders shifted to selling their loans rather than holding them. That in turn changed patterns of incentives, giving banks an incentive to push loans rather than engage in sound lending. That is because banks increasingly made money by taking the fees, commissions, and profits associated with creating CDOs and did not bear the ultimate risk associated with loan performance.

If the loan subsequently went bad it was no longer on the bank's book.
<figure><img src="image_30.png" /><figcaption>Fig. 13. Securitization of debt: Complex securities</figcaption></figure>

The new CDO ‘originate and distribute’ lending model therefore relaxed lender discipline since lenders felt they were not ultimately on the line. This helps explain why debt service burdens were allowed to increase so much and why interest rates did not rise to reflect increased risk premiums. On a global scale, proliferation of such ‘robust’ new financial instruments invokes the redefined fundamental uncertainty framework (Gevorkyan and Gevorkyan 2012). With unclear recovery prospects as investors, driven by portfolio maximizing strategies, pour in and abruptly exit the emerging financial markets, the full brunt of the recent crisis is yet to unravel in the structurally weaker economies.

**6. Conclusion**

Empirically detecting the mechanisms of long cycles is difficult. First, there are technical challenges associated with filtering and spectral methods. Second, and more important, economies are characterized by continuous change that becomes ever more significant as the period of analysis lengthens. For instance, Kuznets and Kondratieff waves of twenty-five to fifty year duration will inevitably take place in a context of significant structural change. Over the last two hundred years, a repeated sequence of structural change has been the transformation of economic activity from agricultural dominance to manufacturing dominance, then on to service sector dominance. Economies are also characterized by institutional change concerning labor markets, regulatory arrangements, and the organization of firms.
These institutional changes alter the processes of decision-making, introduce new decision actors and interest groups, and change the balance between market and government. Technological change has promoted a trend to economic activity that involves less physical production and resource use, and is more intensive regarding knowledge based production activity. As a result, the character and forces of growth are likely to change.<fnref n="12" /> From that perspective, one can never step in the same river twice.

The existence of so much historically idiosyncratic matter makes it empirically difficult to detect cycles of fixed periodicity and amplitude based on time invariant cycle generating mechanisms. Wavelet methods appear to be the most suitable means of empirically identifying economic relationships over cycles of different duration. Technical difficulties notwithstanding the data for some macroeconomic variables (particularly profits) exhibit the dynamics of ups and downs. It also appears possible to talk about stages, or phases, regarding the economic dynamics of developed and emerging market economies. If long cycle theory holds, that raises the question of where we stand today. Are we in the middle of a cycle or at the end of one and awaiting the beginning of another? Those are the questions that the application of long cycle theory and methods may help answer.

## References

**Akaev A. A. 2009.** The Current Financial and Economic Crisis in the Context of the Theory of Innovative Technological Development of Economy and Control over Innovative Process. *System Monitoring. Global and Regional Development* / Ed. by D. A. Khaltourina, and A. V. Korotayev, pp. 141–162. Moscow: URSS. *In Russian* (Акаев А. А. Современный финансово-экономический кризис в свете теории инновационно-технологического развития экономики и управления инновационным процессом. *Системный мониторинг. Глобальное и региональное развитие* / Ред. Д. А. Халтурина, А. В. Коротаев, с. 141–162. М.: УРСС).

**Bernanke B. 2004.** *The Great Moderation*. Remarks at the Meetings of the Eastern Economic Association. Washington, DC, February 20. URL: http://www.federal reserve.gov/boarddocs/speeches/2004/20040220/

**Bernanke B., Gertler M., and Gilchrist S. 1996.** The Financial Accelerator and the Flight to Quality. *Review of Economics and Statistics* 78: 1–15.

**Bernanke B., Gertler M., and Gilchrist S. 1999.** The Financial Accelerator in a Quantitative Business Cycle Framework. *Handbook of Macroeconomics*. Vol. 1 / Ed. by J. B. Taylor, and M. Woodford, pp. 1341–1393. Amsterdam – New York – Oxford: Elsevier Science.

<footnote n="12">¹² Greiner, Semmler and Gong (2005) show how modern growth involves more copying from others, combined with build-up of education and human capital, infrastructure, and knowledge creation.</footnote>
**Buniatian M. A. 1915.** *Economic Crises. Morphology, Theory of Periodical Economic Crises and Theory of Market Conditions.* Moscow: Mysl. *In Russian* (Бунятян М. А. Экономические кризисы. Опыт морфологии и теории периодических экономических кризисов и теории конъюнктуры. М.: Мысль).

**Chang W., and Smyth D. L. 1971.** The Existence and Persistence of Cycles in a Non-Linear Model: Kaldor's 1940 Model Re-Examined. *Review of Economic Studies* 38: 37-46.

**Delli Gatti D., Gallegati M., and Minsky H. 1994.** *Financial Institutions, Economic Policy, and the Dynamic Behavior of the Economy*. Working Paper No. 126. New York: The Jerome Levy Economics Institute of Bard College.

**Ferri P., and Minsky H. 1992.** Market Processes and Thwarting Systems. *Structural Change and Economic Dynamics* 3: 79-91.

**Flaschel P. 1984.** Some Stability Properties of Goodwin's Growth Cycles. *Zeitschrift für Nationaloekonomie* 44: 281-285.

**Flaschel P., and Semmler W. 1987.** Classical and Neoclassical Competitive Adjustment Process. *Manchester School of Economic and Social Studies* 55(1): 13-37.

**Flaschel P., Tavani D., Taylor L., and Teuber T. 2008.** *Demand Driven Goodwin Growth Cycles with a Three-Regimes Wage Phillips Curve*. Working Paper No. 153. University of Bielefeld: Center for Empirical Macro- and Microeconomics.

**Gallegati M., Ramsey J., and Semmler W. 2011.** *Forecasting Output Using Interest Rate Spreads: A Wavelet Decomposition Analysis*. (In Press.)

**Gallegati M., Gallegati M., Ramsey J., and Semmler W. 2011.** The US Wage Phillips Curve Across Frequencies and Over Time. *Oxford Bulletin of Economics and Statistics* 73(4): 489-508.

**Garrison R. 1989.** The Austrian Theory of the Business Cycle in the Light of Modern Macroeconomics. *Review of Austrian Economics* 3: 3-29.

**Garvy G. 1943.** Kondratieff's Theory of Long Cycles. *The Review of Economics and Statistics* 25(4): 203-220.

**Van Gelderen J. 1913.** Springvloed: Beschouwingen over industrieele ontwikkeling en prijsbeweging (Spring Tides of Industrial Development and Price Movements). *De nieuwe tijd* 18.

**Gevorkyan A. V. 2011.** *Innovative Fiscal Policy and Economic Development in Transition Economies*. Oxford, UK: Routledge.

**Gevorkyan A. V., and Gevorkyan Ar. 2012.** Redefined Fundamental Uncertainty, Fiscal Rules, Fiscal Net, Fiscal Sustainability and Emerging Markets Scenarios. *Aestimatio, the IEB International Journal of Finance* 5: 126-161.

**Goodwin R. 1967.** A Growth Cycle. *Socialism, Capitalism and Economic Growth* / Ed. by C. H. Feinstein, pp. 54-58. Cambridge: Cambridge University Press.

**Greiner A., Semmler W., and Gong G. 2005.** *The Forces of Economic Growth*. Princeton, NJ: Princeton University Press.
**Grossman G. M., and Krueger A. B. 1995.** Economic Growth and the Environment. *Quarterly Journal of Economics* 110: 353–377.

**Guckenheimer J., and Holmes P. 1983.** *Nonlinear Oscillations. Dynamical Systems and Bifurcations of Vector Fields*. Berlin – New York: Springer.

**Hicks J. R. 1950.** *A Contribution to the Theory of the Trade Cycle*. Oxford, UK: Clarendon Press.

**Hirsch M. W., and Smale S. 1974.** *Differential Equations, Dynamical Systems and Linear Algebra*. New York: Academic Press.

**Ito T. 1978.** A Note on the Positivity Constraint in Olech's Theorem. *Journal of Economic Theory* 17: 312–318.

**Juglar C. 1862.** *Des Crises commerciales et leur retour periodique en France, en Angleterre, et aux Etats-Unis*. Paris: Guillaumin.

**Kauermann G., Krivobokova T., and Semmler W. 2011.** Filtering Time Series with Penalized Splines. *Studies in Nonlinear Dynamics and Econometrics* 15(2). DOI: 10.2202/1558-3708.1789.

**Kaldor H. 1940.** A Model of the Trade Cycle. *Economic Journal* 50: 78–92.

**Kaldor H. 1971.** A Comment. *Review of Economic Studies* 38: 45–46.

**Kalecki M. 1937.** A Theory of the Business Cycle. *Review of Economic Studies* 4: 77–97.

**Kalecki M. 1971.** *Selected Essays on the Dynamics of the Capitalist Economy*. Cambridge, UK: Cambridge University Press.

**Kitchin J. 1923.** Cycles and Trends in Economic Factors. *Review of Economics and Statistics* 5(1): 10–16.

**Kiyotaki N., and Moore J. 1997.** Credit Cycles. *Journal of Political Economy* 105: 211–248.

**Kondratieff N. 1935.** The Long Waves in Economic Life. *Review of Economics and Statistics* 18(6): 105–15.

**Kondratieff N. 2002.** *Big Cycles of Conjuncture and Theory of Prevision: Selected Works* / Ed. by Y. V. Yakovets, and L. I. Abalkin. *In Russian* (Кондратьев Н. Д. Вольшие циклы конъюнктуры и теория предвидения. Избранные труды / Ред. Я. В. Яковец, Л. И. Абалкин. М.: Экономика).

**Kondratieff N. 2004 [1922].** *The World Economy and its Conjunctures During and After the War* / Ed. by Y. V. Yakovets, and N. A. Makasheva; transl. by V. Wolfson. Moscow: International Kondratieff Foundation.

**Korotayev A., and Tsirel S. 2010.** A Spectral Analysis of World GDP Dynamics: Kondratieff Waves, Kuznets Swings, Juglar and Kitchin Cycles in Global Economic Development, and the 2008–2009 Economic Crisis. *Structure and Dynamics* 4(1). URL: http://www.escholarship.org/uc/item/9jv108xp

**Kuznets S. 1934.** *National Income, 1929–1932*. U.S. Senate document no. 124, 73rd Congress, 2nd session.
**Kuznets S. 1937.** *National Income and Capital Formation, 1919–1935*. New York: National Bureau of Economic Research.

**Kuznets S. 1949.** *National Income and Industrial Structure*. *Econometrica* 17: 205–241.

**Kuznets S. 1955.** *Economic Growth and Income Inequality*. *The American Economic Review* 45(1): 1–28.

**Kuznets S. 1965.** *Economic Growth and Structure: Selected Essays*. New York: Norton.

**Kuznets S. 1966.** *Modern Economic Growth: Rate, Structure, and Spread*. New Haven, CT: Yale University Press.

**Kuznets S. 1971.** *Economic Growth of Nations: Total Output and Production Structure*. Cambridge, UK: Belknap Press of Harvard University Press.

**Kuznets S. 1973.** *Modern Economic Growth: Findings and Reflections*. *The American Economic Review* 63(3): 247–258.

**Mankiw N. 2008.** *Principles of Economics*. 5th ed. Mason, OH: South-Western.

**Marx K. 2003 [1867].** *Capital: A Critique of Political Economy*. Vol. I. *The Process of Capitalist Production*. New York: International Publishers.

**Minorsky N. 1962.** *Nonlinear Oscillations*. New York: D. Van Nostrand Co.

**Minsky H. P. 1957.** *Monetary Systems and Accelerator Models*. *American Economic Review* 47: 859–883.

**Minsky H. P. 1959.** *A Linear Model of Cyclical Growth*. *Review of Economics and Statistics* 41: 133–145.

**Minsky H. P. 1983.** *Financial Structure, Indebtedness and Credit*. Paper prepared for an International Colloquium 'Keynes Today: Theories and Policies'. September, 12. University of Paris I. Pantheon-Sorbonne.

**Minsky H. P. 1992a.** *The Financial Instability Hypothesis*. Working Paper No. 74. New York: The Jerome Levy Economics Institute of Bard College.

**Minsky H. P. 1992b.** *Schumpeter and Finance. Market and Institutions in Economic Development: Essays in Honor of Paulo Sylos Labini* / Ed. by S. Biasco, A. Roncagia, and M Salvati, pp. 103–115. New York: Macmillan Press.

**Palley T. I. 2010.** *The Limits of Minsky's Financial Instability Hypothesis as an Explanation of the Crisis*. *Monthly Review* 61(11): 28–43.

**Palley T. I. 2011.** *A Theory of Minsky Super-Cycles and Financial Crises*. *Contributions to Political Economy* 30(1): 31–46.

**Reati A., and Toporowski J. 2004.** *An Economic Policy for the Fifth Long Wave*. *BNL Quarterly Review* 57(231): 395–437.

**Rostow W. W. 1975.** *Kondratieff, Schumpeter, and Kuznets: Trend Periods Revisited*. *The Journal of Economic History* 35(4): 719–753.

**Samuelson P. A. 1939.** *Interactions between the Multiplier Analysis and the Principle of Acceleration*. *The Review of Economic and Statistics* 21: 75–78.

**Schumpeter J. A. 1939.** *Business Cycles: A Theoretical, Historical and Statistical Analysis of the Capitalist Process*. New York: McGraw-Hill.
**Schumpeter J. A. 1970.** *Capitalism, Socialism and Democracy*. New York: Harper & Row.

**Schumpeter J. A. 2007 [1934].** *The Theory of Economic Development*. New Brunswick, NJ: Transaction Publishers.

**Semmler W. 1986.** On Nonlinear Theories of Economic Cycles and the Persistence of Business Cycles. *Mathematical Social Sciences, Elsevier-North Holland* 12: 47–76.

**Semmler W., and Bernard L. 2012.** Boom-Bust Cycles: Leveraging, Complex Securities, and Asset Prices. *Journal of Economic Behavior and Organization* 81(2): 442–465.

**Stern D. I. 2004.** *The Environmental Kuznets Curve. International Encyclopedia of Ecological Economists*. URL: http://www.ecoeco.org/pdf/stern.pdf

**Tolstov G. 1962.** *Fourier Series*. New York: Dover.

**Velupillai K. 1979.** Some Stability Properties of Goodwin's Growth Cycle. *Zeitschrift für Nationalökonomie* 39: 245–257.

**Whalen C. J. 1999.** *Hyman Minsky's Theory of Capitalist Development*. Working Paper No. 277. New York: The Jerome Levy Economics Institute of Bard College.

**De Wolff S. 1924.** *Prosperitats- und Depressionsperioden. Der Lebendige Marxismus / Hrsg. O. Jenssen, S. 13–43*. Jena: Thuringer Verlagsanstalt.

**World Bank (WB). 1992.** *World Development Report*. Washington: The World Bank.

**Wray L. R. 2009.** Money Manager Capitalism and the Global Financial Crisis. *Macroeconomic Policies on Shaky Foundations: Whither Mainstream Economics? / Ed. by E. Hein, T. Niechoj, and E. Stockhammer, pp. 283–306*. Marburg: Metropolis-Verlag.
## II. LONG CYCLES: ECONOMIC AND POLITICAL ASPECTS

### 4 K-Waves, Technological Clustering, and Some of Its Implications

William R. Thompson

**Abstract**

The etiology of Kondratieff wave (K-waves) is complex because its effects are so pervasive. It may also be that its sources are equally numerous. However, one of the unfortunate byproducts of the K-wave's political-economic centrally is that it means different things to different analysts. Since price data were studied early, a number of observers equate K-wave fluctuations with monetary pulsations. Others link it to generational shifts, investment spikes, stock market oscillations, or war impacts. K-waves encompass all of these activities but it is not clear that it serves our analytical purposes to leave the identity of the core nature of long-term economic pulsations so open-ended. The causal ambiguities contribute strongly to K-waves' controversial status. The more elusive the core identity of K-waves, the easier it is to take the subject less than seriously. The proposed remedy is to acknowledge technological clustering as the central K-wave motor, until or unless we find otherwise.

**Keywords:** transduction, energy, time, money, Snooks-Panov curve, acceleration, singularity, global intelligence Kondratieff waves, technological clustering, innovation, inequality, economic growth, North-South gap, relative decline, industrial revolution, long cycles.

K-waves (or Kondratieff waves) mean many things to different people. I propose that we would all benefit from adopting a stance that views these long-term fluctuations as instances of technological clustering. I borrow the 'technologically clustering' term from Grubler (1998: 117) who refers to a technological cluster as a 'set of interrelated technological and organizational innovations whose pervasive adoption drives a particular period of economic growth, productivity increases, industrialization, trade, and associated structural changes'. If we were to converge on this technological clustering as the central focus of K-wave analysis, as a number of analysts are doing, the significance and centrality of these processes would become more salient, the need to elaborate

Kondratieff Waves: Juglar - Kuznets - Kondratieff 2014 164-180
our theoretical infrastructures would become more imperative, and the unifica-
tion of many findings pointing in different directions might become more feasi-
ble. In other words, the potential payoffs could be considerable.

I attempt to advance the case for this approach by elaborating empirically
some of the implications for technological clustering and world inequality rein-
forcement and systemic leadership decline. Earlier cases have been made for
explaining the North-South income gap in terms of uneven technological diffu-
sion (Thompson and Reuveny 2010) without being able to demonstrate fully
the contours of the uneven diffusion. A relatively new dataset developed by
Comin and Hobijn (2009) facilitates a more direct examination of this phenom-
enon. At the same time, uneven technological clustering within the principal
source of innovation, the lead economy, also helps explain puzzles relating to
the relative decline of the incumbent system leader.

Technological Clustering

Receptivity to K-wave analyses is subject to unusually heavy perceptual bur-
dens and a great deal of ingrained resistance. Given the early history of Kon-
dratieff fluctuation study, especially its emphasis on mainly inductive and em-
pirical as opposed to theoretical examinations and the initial heavy emphasis on
prices, K-wave analyses have struggled to proceed beyond seeking existential
evidence that the long-term fluctuations are real. For many economists, they
simply do not exist. Not only do they not fit easily into the short-term focus of
contemporary economic analysis, they also can be dismissed on the grounds
of underdeveloped or contradictory theoretical explanations. It does not help
that we continue to quarrel about the roots of K-wave fluctuations – is it prices,
wages, radical technology clusters, generations, wars, demographic changes, or
investment – let alone astrology and numerology – that ultimately drives the
40–60 year undulations? What is the scope of K-wave fluctuations – are they
universal, restricted to more developed economies, or do they start and become
most characteristic in the world system's lead economy? And, of course, what is
the timing of the K-wave fluctuations? Virtually all K-wave analyses seem to
prefer different periodizations.

Despite these persistent disagreements, we may at least be moving toward
something resembling an emerging consensus that radical technology clusters
lie at or near the heart of these irregular perturbations.<fnref n="1" /> To the extent that this is
the case, we might do well to stress the uneven development of new technology
and its myriad implications as the central focus of K-wave analyses. The prob-
lem then is not that much of economic scholarship ignores K-wave phenomena

<footnote n="1">¹ See, among many, Freeman and Perez (1988), Ayres (1990a, 1990b), Modelski and Thompson (1996), Grubler (1998), Boswell and Chase-Dunn (2000), Freeman and Louca (2001), Devezas and Modelski (2006), Thompson (2007), Rennstich (2008), Korotayev *et al*. (2011), Archibugi and Filippetti (2012), Edmonson (2012), and Linstone and Devezas (2012).</footnote>
as figments of overwrought imaginations; the problem is that much of economic scholarship ignores the uneven development of new technology and its implications. It is more the assumption that technological developments are virtually constant and incremental that seriously handicaps the analysis of economics and political economy – than it is the disinclination to take K-waves seriously. We would all be better off if we embraced the idea of uneven technological development, even if that meant losing the K-wave conceptualization and its long history of fringe acceptance at best.

But it is not enough to accept the centrality of the unevenness of technological developments. If the pace and processes of technological development are indeed central, some other elements should become clearer. Technology does not fall from the heavens, it must be invented and innovated by someone. Although inventions are widespread, innovation tends to be restricted in geographical scope.<fnref n="2" /> Innovations tend to appear in some part(s) of the world before they diffuse to some other parts of the world. Note that there is no reason to assume that technological diffusion is universal. It is not. Technological diffusion is just as uneven as its innovation. It is the unevenness of these processes that lead to and/or reinforce structured world inequalities. New technological innovations appear in the North and some elements of the novelties eventually appear in parts of the South. Yet this lead-lag process means that much of the South is always lagging behind the North. If a few states in the South have some potential of catching up with Northern technological complexity and affluence (and have done so), many do not. Not only does much of the South lag behind the North, the magnitude of the lag implies more economic divergence than it resembles anything like economic convergence.

If K-waves are about uneven technological innovations, then K-waves are also responsible in part for world inequality. But there is much more to the story. As the main engine of long-term economic growth, technological clustering processes concentrate wealth globally, carry out Schumpeterian 'creative destruction', and transform periodically how the world – or some of the world – literally works. Technological clustering has also become increasingly critical to the rise and relative decline of lead economies. There are different ways to elaborate this premise. My preference is linked to the Modelski-Thompson leadership long cycle perspective.<fnref n="3" />

In this perspective, long-term economic change is stimulated by radical innovations in commerce and industry. These innovations are spatially and temporally concentrated in one state for a finite period of time, as delineated in

<footnote n="2">² This generalization is based on historical tendencies. Like many others, it may not hold into the future.</footnote>

<footnote n="3">³ See, e.g., Modelski 1987; Modelski and Modelski 1988; Modelski and Thompson 1988, 1996; Thompson 1988, 2000; Rasler and Thompson 1994; Reuveny and Thompson 2004; Modelski, Devezas, and Thompson 2008; and Thompson and Reuveny 2010.</footnote>
Table 1 and Fig. 2. After they are introduced, they bring about major changes in the way economies function as their techniques and implications diffuse throughout the pioneering economy and then to other advanced economies that are in a position to adopt or adapt the new ways of doing business.

<table><caption>**Table 1.** Leading sector timing and indicators, 15th to 21st centuries</caption><thead><tr><th>Lead Economy</th><th>Leading Sector Indicators</th><th>Start-up Phase</th><th>High Growth Phase</th></tr></thead><tbody><tr><td rowspan="2">Portugal</td><td>Guinea Gold</td><td>1430–1460</td><td>1460–1494</td></tr><tr><td>Indian Pepper</td><td>1494–1516</td><td>1516–1540</td></tr><tr><td rowspan="2">Netherlands</td><td>Baltic and Atlantic Trade</td><td>1540–1560</td><td>1560–1580</td></tr><tr><td>Eastern Trade</td><td>1580–1609</td><td>1609–1640</td></tr><tr><td rowspan="2">Britain I</td><td>Amerasian Trade (especially sugar)</td><td>1640–1660</td><td>1660–1688</td></tr><tr><td>Amerasian Trade</td><td>1688–1713</td><td>1713–1740</td></tr><tr><td rowspan="2">Britain II</td><td>Cotton, Iron</td><td>1740–1763</td><td>1763–1792</td></tr><tr><td>Railroads, Steam</td><td>1792–1815</td><td>1815–1850</td></tr><tr><td rowspan="2">United States I</td><td>Steel, Chemicals, Electronics</td><td>1850–1873</td><td>1873–1914</td></tr><tr><td>Motor Vehicles, Aviation, Electronics</td><td>1914–1945</td><td>1945–1973</td></tr><tr><td rowspan="2">United States II?</td><td>Information Industries</td><td>1973–2000</td><td>2000–2030</td></tr><tr><td>?</td><td>2030–2050</td><td>2050–2080</td></tr></tbody></table>

As pioneers, the initial source of new best practice technologies reap major profits and lead in economic development. They need sea power to protect the affluent home base and the sea routes via which its products are distributed around the world from potential predators. In the early leaders, major advances in ship construction were critical to the packages of innovations being introduced to the world economy. More generally, though, the gains from pioneering new commercial networks and industrial production financed the leading arsenals of global reach capabilities developed by system leaders. Those same gains later led to system leaders becoming a, if not the, principal source of credit for the world economy.
<figure><img src="image_31.png" /><figcaption>Fig. 1. Leading sector concentration</figcaption></figure>

Thus, at the heart of leadership long cycle theorizing is a historicized model of long-term economic growth (Modelski and Thompson 1996; Rennstich 2008). There is no denying the importance of population size, resource endowment wealth, mass and elite consumption, savings, and other standard foci of economic growth models. But these are primarily short-term considerations. Over the long haul, development is driven by radical technological revolutions that spike roughly every half century or so. These are the long waves of economic growth that are also referred to as Kondratieff or K-waves. They are more irregular waves than neat cycles coming and going with precise periodicity. They also can best be visualized as sequential, S-shaped, logistic growth curves. New technology enters the lead economy slowly at first, then accelerates and ultimately peaks at some point before decaying in impact as new technology becomes increasingly routine and/or is pushed aside by even newer technology.

By focusing on the leading sectors that are at the heart of these technological breakthroughs, it is also possible to measure them, thereby providing important empirical support for the claims that these phenomena exist. It has also been possible to demonstrate that their main carriers, the leading sectors, stimulate the economic growth of the system leader's national economy and the world economy (Reuveny and Thompson 2001, 2004; Rasler and Thompson 2005).

Two applications will have to suffice. One involves world inequality. The argument is that technological clustering is one of the main drivers of the continuing income divergence between the North and the South. Southern incomes have improved but Northern incomes have improved even more so. One reason
is that new technology clusters diffuse unevenly and the process is subject to long lags. The South, or most of it, tends to fall farther behind with the arrival of each subsequent technology cluster. The North, on the other hand, tends to absorb these sequences of new technology clusters more readily. As a consequence, Northern incomes have tended to converge.

The second application concerns systemic leadership decline. Much ado is currently being made about China approaching the position of possessing the largest economy in the world. Of course, it has held this position before and some would even argue, historically, that China has the longest claim on possessing the world's largest economy. Yet while size matters, it is not the sole criterion of power in the world economy. A stronger case can be made for leadership in technological innovation, the qualitative dimension of economic clout in the world economy, as being more crucial. But adopting this position suggests that the incumbent lead economy is faltering on both quantitative and qualitative criteria. Or is it? Another possibility is that we do not yet know how to interpret the observed sequence of technological clustering. What appears to be current U.S. relative decline may reflect just that but it may also reflect uneven impacts of technological clustering over time. In other words, our tendency to assume that each cluster is more or less equal in transformational potential may simply be wrong. If some clusters are weaker than others, we need to take that into consideration in evaluating who leads in contemporary technological innovation – just as we need to contemplate who might lead in the next cluster, assuming there is one.

## World Inequality

The North-South income gap is diverging with the North improving its relative position much faster than the South. One quick empirical demonstration of this tendency is displayed in Table 2. Average regional gross domestic product per capita improved everywhere from the 19th through the 20th centuries. But it improved most dramatically in the places that generated new technology and that could absorb the new technologies that were generated – initially, Western Europe, then the Western Offshoots, and, later, Japan. Between 1820 and 2001, Western European GDP per capita increased 16-fold. The Western Offshoots GDP per capita in 2001 was 22.4 times as large as it had been in 1820. Japanese income per capita increased by a factor of nearly a 31-fold increase.
<table><caption>**Table 2.** Changes in regionally averaged gross domestic product per capita</caption><thead><tr><th></th><th>1820</th><th>1870</th><th>1913</th><th>1950</th><th>1973</th><th>2001</th></tr></thead><tbody><tr><td>Western Europe</td><td>1204</td><td>1960</td><td>3458</td><td>4579</td><td>11416</td><td>19256</td></tr><tr><td>Western Offshoots</td><td>1202</td><td>2419</td><td>5233</td><td>9268</td><td>16179</td><td>26943</td></tr><tr><td>Latin America</td><td>692</td><td>681</td><td>1481</td><td>2506</td><td>4504</td><td>5811</td></tr><tr><td>Former Soviet Union</td><td>688</td><td>943</td><td>1488</td><td>2841</td><td>6059</td><td>4626</td></tr><tr><td>Eastern Europe</td><td>683</td><td>937</td><td>1695</td><td>2111</td><td>4988</td><td>6027</td></tr><tr><td>Japan</td><td>669</td><td>737</td><td>1387</td><td>1921</td><td>11434</td><td>20683</td></tr><tr><td>Asia</td><td>577</td><td>550</td><td>658</td><td>634</td><td>1226</td><td>3056</td></tr><tr><td>Africa</td><td>420</td><td>500</td><td>637</td><td>894</td><td>1410</td><td>1489</td></tr></tbody></table>

Source: Maddison 2003.

In contrast, regions in the rest of the world started lower and expanded less quickly. Eastern Europe managed nearly a 9-fold increase and Latin America area was not too far behind (8.4-fold increase). The former Soviet Union area's expansion was in the middle of the other five regions (6.7-fold increase) – no doubt influenced by the severe economic deterioration of the FSU economy in the 1990s. Asia (without Japan) comes next, followed by Africa which registered only a 3.5-fold increase in GDP per capita. One known concomitant of these changes is that the income gaps between the early leaders (Western Europe and especially Britain and the Western Offshoots and especially the United States) and the slower growing areas diverged rather than converged. The gap in 1820 between the early leaders and the rest ranged from 1:1.7 (with Latin America) to as much as 3:1 in reference to Africa. By 2001, the income gap between the western offshoots and Latin America had grown to 1:4.6 and the gap with Africa was 1:18.1.

To what extent might we attribute the widening gap to uneven technology diffusion? Bairoch's (1982) data on the geographical distribution of manufacturing provides a useful starting point for this question. Manufacturing, as one imperfect index of the location and innovation of higher technology, became increasingly concentrated in the global North (Western Europe, North America, and eventually, Japan). Table 3 focuses on the chief technology pioneers of the nineteenth and twentieth centuries, Britain and the United States, and two Bairoch aggregations, the Developed Countries (DCs) and the Third World (China,
Indian, and a few Latin American states.) We view these two aggregations as rough approximations of the global North and South, respectively.

Table 3 shows world manufacturing residing largely in the South through the first third of the nineteenth century but moving increasingly to the North by mid-century. The two individual leaders in this shift were Britain peaking around 1880 – (with 22.9 percent) and then the United States peaking in the early 1950s (44.7 percent). For much of the twentieth century (until the 1990s), Bairoch's data suggest that most of the world outside the most affluent zone produced from 7 to 13 percent of world's manufacturing output. After 1980, the global South continued to make solid gains but the global North continues to monopolize manufacturing. In 2005, the developed world's roughly 3:1 ratio was exactly the reverse of its 1:3 ratio in 1750.

<table><caption>**Table 3.** Proportion of world manufacturing production</caption><thead><tr><th>Year</th><th>Britain</th><th>United States</th><th>Developed World</th><th>Third World</th></tr></thead><tbody><tr><td>1750</td><td>1.9</td><td>0.1</td><td>27</td><td>73</td></tr><tr><td>1800</td><td>4.3</td><td>0.8</td><td>32.2</td><td>67.8</td></tr><tr><td>1830</td><td>9.5</td><td>2.4</td><td>39.5</td><td>60.5</td></tr><tr><td>1860</td><td>19.9</td><td>7.2</td><td>63.4</td><td>36.6</td></tr><tr><td>1880</td><td>22.9</td><td>14.7</td><td>79.1</td><td>20.9</td></tr><tr><td>1900</td><td>18.5</td><td>23.6</td><td>89</td><td>11</td></tr><tr><td>1913</td><td>13.6</td><td>32</td><td>92.5</td><td>7.5</td></tr><tr><td>1928</td><td>9.9</td><td>39.3</td><td>92.8</td><td>7.2</td></tr><tr><td>1938</td><td>10.7</td><td>31.4</td><td>92.8</td><td>7.2</td></tr><tr><td>1953</td><td>8.4</td><td>44.7</td><td>87</td><td>13</td></tr><tr><td>1963</td><td>6.4</td><td>35.1</td><td>91.3</td><td>8.7</td></tr><tr><td>1973</td><td>4.9</td><td>33</td><td>90.1</td><td>9.9</td></tr><tr><td>1980</td><td>4</td><td>31.5</td><td>88</td><td>12</td></tr><tr><td>1991</td><td>4.5</td><td>23.5</td><td>84.2</td><td>15.8</td></tr><tr><td>1995</td><td>4</td><td>23.5</td><td>81.6</td><td>18.4</td></tr><tr><td>2000</td><td>3.9</td><td>26.6</td><td>78.8</td><td>21.2</td></tr><tr><td>2005</td><td>3.6</td><td>22.3</td><td>72.3</td><td>27.7</td></tr><tr><td>2010</td><td>2.3</td><td>17.6</td><td>60.7</td><td>39.3</td></tr></tbody></table>

*Notes:* The 1750–1980 data are based on numbers reported in Bairoch (1982). The 1991–2010 figures are based on World Development Indicators (WDI Online) value-added manufacturing, substituting ‘high income’ aggregations for Bairoch’s ‘developed world’ and ‘low/middle income’ for the Third World aggregation.

Manufacturing retains the claim to constituting the primary vehicle of economic transformation in the past few centuries. It brought about the possibility of continuous and sustained economic development by transforming worker atti-
tudes and skills as well as structures and institutions of production and socio-political regulation. Lall and Kraemer-Mbula (2005: 4) conclude that manufacturing ‘has been, and remains the main engine of structural transformation’. Moreover, the leaders in world manufacturing also specialize in introducing new technology through their manufacturing (Kozul-Wright 2006).

Yet an examination of historical distributions of manufacturing suggests that the North-South imbalance in manufacturing is returning to a more symmetrical relationship – or perhaps even where it stood in the 18th century. If so, it would suggest that technology may not have been a main driver of the widening North-South income gap. Otherwise, the Southern share of manufacturing would not be moving up (as shown in Fig. 2) while its income fell farther behind proportionately.

That is one interpretation. An alternative one is that manufacturing relies on different mixtures of routine and novel technology. Bairoch's data does not discriminate among the two. If the improvements in Southern manufacturing production tend to be more routine while the North retained the advantages of the newest technological clusters, we would still expect to see a widening income gap – as long as the new technology was more profitable than technology that had become routine.

<figure><img src="image_32.png" /><figcaption>Fig. 2. Developing and developed manufacturing proportions</figcaption></figure>

We know that economic growth rates have varied in different parts of the world and that the disparity between the most advanced economies and the less developed economies is expanding – subject, of course, to some notable exceptions. What is less common at least in mainstream treatments is to link these changes to the Kondratieff or K-wave process via technological clustering. Although it is not difficult to show North-South Divergence in terms of gross do-
mestic product per capita (Thompson and Reuveny 2010), it has not yet been examined directly in terms of technology. Comin and Hobijn's (2009) relatively new data set on the acquisition of a large number of technologies (100) for some 150 states since 1800 makes it possible to look at these shifts without relying on GDP per capita or un-differentiated manufacturing production.<fnref n="4" /> To simplify the complexity introduced by examining a large number of technologies simultaneously, nine technologies of some significance (identified in Table 4) are extracted for examination in a comparative regional frame. An overall technology score is computed by aggregating the standardized raw scores of each indicator and dividing by nine. Regional scores are then computed by averaging the overall technology scores of the member states.

<table><caption>**Table 4.** Major technology indicators</caption><thead><tr><th>Indicators</th></tr></thead><tbody><tr><td>Steam ship</td></tr><tr><td>Passenger train</td></tr><tr><td>Telegraph</td></tr><tr><td>Telephone</td></tr><tr><td>Electric power</td></tr><tr><td>Car</td></tr><tr><td>Passenger plane</td></tr><tr><td>Cellphone</td></tr><tr><td>Computer</td></tr><tr><td>Overall Technology = sum of the standardized raw scores/9</td></tr></tbody></table>

Table 5 re-calculates growth rates for the 1870–1913 and 1950–1973 periods. The most striking pattern in Table 5 is that some regions did better in one of the two growth waves than they did in the other. With the exception of Latin America, the regions other than the Western Offshoots did better in the catch-up, 1950–1973 wave than in the epochal 1870–1913 wave. The Western Offshoots fared best in the 1870–1913 wave and did somewhat less well (compared to past changes) in the next up-wave. At the same time, some of the regions were passed over altogether by some of the growth waves. Asia and Africa, for example, benefitted little in the 1870–1913 wave. Parts of Asia benefited considerably in the 1950–1973 (Japan, South Korea, Taiwan, and Singapore) while other parts of Asia did not benefit immediately. The scores for Africa suggest it only fell farther behind in the 1950–1973 wave.<fnref n="5" />

<footnote n="4">⁴ Some caution should be exercised in using CHAT. Entries are not always comparable because they have been taken from sources that use different metrics (e.g., some data are reported in thousands while others are reported in millions). There are missing data and data reported cover the last two-thirds of the 19th century but all of the 20th century. Data for some countries, however, only is reported after World War II.</footnote>

<footnote n="5">⁵ This could be an artifact of the very few African countries for which there were pertinent data in the 1950s.</footnote>
<table><caption>**Table 5.** Changes in regional technology scores</caption><thead><tr><th></th><th>1870</th><th>1913</th><th>1950</th><th>1973</th><th>1998</th></tr></thead><tbody><tr><td>Western Offshoots</td><td>.008</td><td>.929</td><td>2.351</td><td>2.601</td><td>1.861</td></tr><tr><td>Western Europe</td><td>.107</td><td>.438</td><td>.406</td><td>1.361</td><td>1.772</td></tr><tr><td>Japan</td><td>-1.033</td><td>-.231</td><td>n.d.</td><td>.584</td><td>1.980</td></tr><tr><td>Former Soviet Union</td><td>-.904</td><td>-.509</td><td>-.054</td><td>.796</td><td>-.558</td></tr><tr><td>Eastern Europe</td><td>-.509</td><td>-.408</td><td>-.357</td><td>.161</td><td>.129</td></tr><tr><td>Latin America</td><td>-.474</td><td>-.473</td><td>-.394</td><td>-.377</td><td>-.364</td></tr><tr><td>Asia</td><td>n.d.</td><td>-.925</td><td>-.534</td><td>-.268</td><td>-.187</td></tr><tr><td>Africa</td><td>n.d.</td><td>n.d.</td><td>-.338</td><td>-.481</td><td>-.568</td></tr></tbody></table>

Table 5 also suggests that, technologically speaking, things do not stand still after and in between periods of technological acceleration. By 1998, the Western Offshoots no longer could claim technological centrality. This position was now shared more or less with Western Europe and Japan. The Soviet Union collapsed and experienced a setback in the gains achieved in the 1950–1973 catch-up period. Latin America's relative regional standing did not change much in the second half of the 20th century. Asian scores continued to improve, albeit slowly, while African scores continue to fall behind. These results seem to jibe with what is found in gross domestic product per capita accounts. Not surprisingly, the correlation between the overall technology scores and regionally averaged gross domestic product per capita is quite high.

These observations raise another interesting question about the basic pulse of technological clustering. K-wave analysts prefer roughly a two beat per ‘century’ pace while others are more comfortable with what is effectively a one beat per ‘century’ rhythm. This is of course an empirical question. Much of the two beat pace is based on extensive empirical work to support it while one beat pace authors are usually content to simply declare their long phases. But it is also clear that the growth and change reverberations of each new technological cluster can persist long beyond its onset.<fnref n="6" /> Comin and Hobijn (2010), for instance, find evidence for 100 year lags in the diffusion of some technologies but their reference is global.<fnref n="7" /> Just how long it takes for new technology to diffuse throughout single economies is less clear. But one can assume it varies by economy and technology. It seems most reasonable to assume that technology clusters overlap as opposed to the advent of one cluster indicating the demise of its predecessor(s). Such an assumption means only that we have much to map in terms of the diffusion of technology diffusion within and across states.

<footnote n="6">⁶ Railroads provide an excellent example. First introduced in the 1820s and 1830s in places such as Britain and the United States, it took decades for them to dominate transportation networks in these countries. Should we focus on their high growth rates in the early-mid century or their increasing predominance later in the century and into the next one?</footnote>

<footnote n="7">⁷ Comin and Hobijn also start their diffusion clocks from the point of invention which can add a number of decades to the diffusion of some technologies, especially in the 19th century.</footnote>
## System Leader Relative Decline

The technological clustering perspective on the K-wave suggests five features of Kondratieff processes that have not yet received sufficient attention. One is that every growth wave is not equal. Some growth waves are strong while others are comparatively weaker. A second feature that has not been explored much is just how long the impacts take to be fully registered at the source. While we think we can isolate periods of high growth due to innovational changes, these remain largely guesswork. A third feature is that the extent of diffusion varies from one wave to the next. Some areas benefit more than others but not necessarily consistently. The combination of the first three features suggests a fourth – K-wave processes are anything but uniform over time and space. Their effects are neither instantaneous nor are they experienced equally across space. Finally, the unevenness of the K-wave's geographical diffusion is matched by the unevenness of the innovation source's advantage. Other parts of the world catch up while the center is either standing still or even backsliding, relative to its own past successes, or experiencing relative decline.

That these same generalizations apply to the concentrated sources of technological innovation should not be surprising. When we talk about repetitive wave-like motion or even a sequence of S-shaped growth curves, the imagery of similar shaped waves comes readily to mind. Yet it is becoming increasingly apparent that K-waves are not equally shaped. Some have more impact than others. The economist, Robert J. Gordon, has been one of the more persistent critics of the idea of continuous technological growth. Some of his assumptions resemble broadly those of the long cycle / K-wave model.<fnref n="8" /> He argues that first Britain and then the United States became the leaders in output per capita – Britain very slowly beginning around 1700 and the United States at a faster pace in the early 20th century. Three industrial revolutions, beginning around 1750, were the main vehicles for improving output per capita – which had not seen much improvement prior to 1750.

The first industrial revolution lasted from 1750 to 1830 and focused on steam, textiles, and railroads. Its impact in terms of transforming the U.S. economy persisted for another 100 years. The second industrial revolution was shorter (1879–1900) but much greater in transformational impact. Its focus encompassed electricity; internal combustion engines; running water/indoor

<footnote n="8">⁸ While some assumptions do not and it is the assumptions that differ that help explain Gordon's pessimism. He starts with the assumption that nothing fundamentally changed before 1750 and the advent of a series of overlapping industrial revolution. Where he sees one revolution that lasted from 1870 to 1970, the long cycle model and most K-wave arguments see at least two revolutions. While Gordon recognizes three revolutions, he does not seem to anticipate the fourth industrial revolution any time in the foreseeable future. Rather, he sees diminishing intervals of revolution with variable impacts, both initially and over time. From his perspective, the weakness of the third revolution is apt to be with us for some time to come and aggravated by a number of problems characterizing the U.S. economy and society.</footnote>
plumbing and its sanitation implications; molecular re-arrangements in petroleum, chemicals, plastics, and pharmaceuticals; and communication/entertainment innovations (telephone, phonograph, photography, radio, and motion pictures). These innovations continued to transform the U.S. economy up to about 1970, with particular emphasis on the diffusion of air conditioning, home appliances, and highway systems.

The third industrial revolution, centered on information technology, began to be discernible from about 1960 on. Robots, credit cards, and computers were introduced and had some impact to be sure but not enough to change overall productivity all that much. The second push came in the 1990s with the internet, web, and expanding e-commerce. This second push was sufficient to bring about some positive change in productivity statistics but it has proved to be short-lived.

Gordon (2012: 13) notes that the average growth rates for U.S. labor productivity was 2.33% for the 1891–1972 period, despite wars and depression. From 1972 to 1996, the average growth rate declined to 1.38%. Then it improved considerably but for only a decade (1996–2004 = 2.46%). For almost the last decade, it has retreated to 1.33%. Gordon's main point is that the second industrial revolution was able to sustain productivity improvements for over 80 years while the third revolution is associated with a meager 10 year bump. The reason is that the changes wrought between 1870 and 1900 were more transformational than the impact of the 1996–2004 period. Each revolution brings about unique transformations but some are more unique than others. Stretching his own periodization, Gordon argues that transportation speeds accelerated from horseback pace to jet engines by 1958 and that we are unlikely to see any such acceleration ever again. A less debatable example is the shift from a society that is primarily rural to one that is primarily urban.

Unique transformations have occurred as a consequence of the third revolution as well. Typing has shifted from mechanical machines that were awkward to correct to easily correctible computerized keyboards. Hard-bound books are in the process of disappearing. Transistor radios have been replaced by ipods. Yet these transformations do not quite measure up to the revolutionary impacts of replacing horse-drawn plows with tractors or being able to control the internal temperature of residences and work places. Vaclav Smil (2005) has made the same point in a book devoted solely to this topic. The technological innovations, in his accounting, from 1867–1914, constituted the greatest technological discontinuity in history.

It may be that both Gordon and Smil will prove to have been overly pessimistic. K-wave analysts are conditioned to anticipate continuing revolutions in technology. We do not know exactly what is coming down the pike. It may well be that analysts in the future will talk about the complete disappearance of human labor in favor of robots or the radical implications of nano-manufacturing in the
same way that we now look at the transition from horse-drawn plows to tractors. Then, too, we have not yet seen the full impact of information technology or its interaction with biotechnology. Perhaps, we need to wait until 2050 to be able to fully assess the productivity impact of the latest industrial revolution. This admonition suggests caution in interpreting the incumbent system leader's economic weaknesses. Structurally, it is difficult to deny relative decline, albeit fairly slow paced relative economic decline on the part of the United States. It may be, however, that: a) the latest technological cluster's impact was also relatively weak, or b) we have yet to experience the full impact of the transformations associated with the ongoing technological cluster.

The leadership long cycle perspective (see Table 1) sees the high growth period of the current technological cluster as lasting through 2030. We may need to hold our breath collectively for a while to see how things shake out technological-ly-speaking, at least in terms of the full impact of the latest cluster. We also need to pay less attention to the size of the economy and look more closely at where the current technological clustering is being manifested. In many respects, the primary location, if there is one, also seems less than clear. That may mean that technological clustering has become less geographically limited in initial innovation. Or, it may mean that we do not know exactly what to look for in terms of the best indicators of contemporary technological clustering.

The Gordon-Smil point of view, nonetheless, remains well-taken. We should not expect every upsurge to be equal in strength or significance. We already recognize that every K-wave downturn has not been equal – even if we have been slow to explain precisely why that is the case. Technological development is uneven in pace. This rule holds for the privileged leader in innovation as well as it does for the places to which the innovations eventually (or not) diffuse. In this respect, the relative decline of the system leader can be explained in the same terms that we use to explain world inequalities. It is certainly reductionist to attribute both relative decline and the North-South gap to the nature of K-wave processes. Yet it is a useful form of reductionism and one that should prove more fruitful than focusing primarily on whether evidence exists for irregular fluctuations in a variety of behaviors.<fnref n="9" /> By this point, how and where K-waves operate unevenly should be more important than whether they show up in every possible indicator at all times and places. To proceed otherwise amounts simply to misunderstanding the fundamental nature of K-wave processes or the processes and implications of uneven technological development.

<footnote n="9">⁹ By no means am I denigrating the search for temporal periodicities in K-wave phenomena. That activity must continue and is highly valuable. But we also need to spend more time with the theoretical and conceptual dimensions as well.</footnote>
Conclusions

Technological clustering is what Ocampo and Parra (2006) call the global de-
velopment cycle. As such, it shapes who develops, at what pace they develop,
and just how stratified the world economy becomes as a consequence of eco-
nomic development. Technological clustering is anything but deterministic; it
also interacts with a number of local variables. Different local economies are
impacted differentially and certainly unevenly. The sooner we come to terms
with the existence of this fundamental, long-term growth process and its myriad
implications for diffusion, the better off we will be in terms of explanatory
power in a number of different disciplines.

References

Archibugi D., and Filippetti A. 2012. *Innovation and Economic Crisis: Lessons and Prospects from the Economic Downturn*. London: Routledge.

Ayres R. U. 1990a. Technological Transformations and Long Waves, Part I. *Technological Forecasting and Social Change* 37: 1–38.

Ayres R. U. 1990b. Technological Transformations and Long Waves, Part II. *Technological Forecasting and Social Change* 37: 111–138.

Bairoch P. 1982. International Industrialization Levels from 1750 to 1980. *Journal of European Economic History* 11: 269–333.

Boswell T., and Chase-Dunn C. 2000. *The Spiral of Capitalism and Socialism: Toward Global Democracy*. Boulder, CO: Lynne Rienner.

Comin D. A., and Hobijn B. 2008. *An Exploration of Technology Diffusion*. Working Paper 08-903. Cambridge, MA: Harvard Business School.

Comin D. A., and Hobijn B. 2009. *The CHAT Dataset*. NBER Working Paper. No. 15319, September. Cambridge, MA: National Bureau of Economic Research. URL: http://www.Nber.org/papers/w15139

Comin D. A., and Hobijn B. 2010. An Exploration of Technology Diffusion. *American Economic Review* 100(5): 2031–2059.

Comin D. A., and Hobijn B. 2011. Technology Diffusion and Postwar Growth. NBER Macroeconomics Annual 25: 209–259.

Devezas T., and Modelski G. 2006. The Portuguese as System-Builders in the XVth–XVIth Centuries: A Case Study on the Role of Technology in the Evolution of the World System. *Globalizations* 3: 503–519.

Edmonson N. 2012. *Technology Cycles and U.S. Economic Policy in the Early 21st Century*. New Brunswick, NJ: Transaction Press.

Freeman C., and Louca F. 2001. *As Time Goes By: From the Industrial Revolution to the Information Revolution*. Oxford: Oxford University Press.

Freeman C., and Perez C. 1988. Structural Crises of Adjustment: Business Cycles and Investment Behavior. *Technical Change and Economic Theory* / Ed. by G. Dose, C. Freeman, R. Nelson, G. Silverberg, and L. Soete, pp. 38–66. London: Pinter.
Goldstein J. S. 1988. *Long Cycles*. New Haven, CT: Yale University Press.

Gordon R. J. 2012. *Is U.S. Economic Growth Over? Faltering Innovation Confronts the Six Headwinds*. NBER Working Paper No. 18315. Cambridge, MA: National Bureau of Economic Research. URL: http://www.nber.org/papers/w18315

Grubler A. 1998. *Technology and Global Change*. Cambridge, MA: Cambridge University Press.

Korotayev A., Zinkina J., and Bogevolnov J. 2011. Kondratieff Waves in Global In- vention Activity (1900–2008). *Technological Forecasting and Social Change* 78: 1280–1284.

Kozul-Wright R. 2006. Globalization Now and Again. *Globalization Under Hegemo- ny: The Changing World Economy* / Ed. by K. S. Jomo, pp. 100–132. New Delhi: Oxford University Press.

Lall S., and Kraemer-Mbula E. 2005. *Industrial Competitiveness in Africa: Lessons from East Asia*. Warwickshire: ITDG Publishing.

Linstone H. A., and Devezas T. 2012. Technological Innovation and the Long Wave Theory. *Technological Forecasting and Social Change* 79: 414–416.

Maddison A. M. 2003. *The World Economy: Historical Statistics*. Paris: OECD.

Mensch G. O. 1979. *Stalemate in Technology: Innovations Overcome the Depression*. Cambridge, MA: Ballinger.

Modelski G. 1987. *Long Cycles in World Politics*. London: Macmillan.

Modelski G., and Modelski S. (Eds.) 1988. *Documenting Global Leadership*. London: Macmillan.

Modelski G., and Thompson W. R. 1988. *Sea Power in Global Politics, 1494–1993*. London: Macmillan.

Modelski G., and Thompson W. R. 1996. *Leading Sectors and World Power: The Coevolution of Global Economics and Politics*. Columbia, SC: University of South Carolina Press.

Modelski G., Devezas T., and Thompson W. R. (Eds.) 2008. *Globalization as Evolu- tionary Process: Modeling Global Change*. London: Routledge.

Ocampo J. A., and Parra M. A. 2006. *The Dual Divergence: Growth Successes and Collapses in the Developing World since 1980*. DESA Working Paper No. 24. St/ESA/2006/DWP/24. New York: United Nations Department of Economic and Social Affairs.

Perez C. 2002. *Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages*. Cheltenham: Edward Elgar.

Rasler K., and Thompson W. R. 1994. *The Great Powers and Global Struggle: 1490– 1990*. Lexington: University Press of Kentucky.

Rasler K., and Thompson W. R. 2005. War, Trade and the Mediation of Systemic Leadership. *Journal of Peace Research* 42(3): 251–269.

Rennstich J. K. 2008. *The Making of a Digital World: The Evolution of Technological Change and How It Shaped Our World*. New York: Palgrave Macmillan.

Reuveny R., and Thompson W. R. 2001. Leading Sectors, Lead Economies and Eco- nomic Growth. *Review of International Political Economy* 8(4): 689–719.
**Reuveny R., and Thompson W. R. 2004.** *Growth, Trade and Systemic Leadership*. Ann Arbor, MA: University of Michigan Press.

**Smil V. 2005.** *Creating the Twentieth Century: Technical Innovations of 1867–1914 and Their Everlasting Impact*. New York: Oxford University Press.

**Thompson W. R. 1988.** *On Global War: Historical-Structural Approaches to World Politics*. Columbia, SC: University of South Carolina Press.

**Thompson W. R. 2000.** *The Emergence of the Global Political Economy*. London: UCL Press/Routledge.

**Thompson W. R. 2007.** The Kondratieff Wave as Global Social Process. *World System History*. UNESCO Encyclopedia of Life Support Systems / Ed. by G. Modelski, and R. A. Denemark. Oxford: EOLSS Publishers. URL: http://www.eolss.net

**Thompson W. R., and Reuveny R. 2010.** *Limits to Globalization: North-South Divergence*. London: Routledge.
# 5
## The Hallmarks of Crisis. A New Center-Periphery Perspective on Long Economic Cycles

Arno Tausch

### Abstract

Our analysis, based on a variety of standard econometric techniques, aims to be a fairly comprehensive test of the hypotheses about long cycles, associated with the name of Kondratieff and Kuznets. Our work, which takes up a recent approach by Barro (Barro and Ursua 2008; Barro et al. 2013) tries to link the issue of long cycles with the issue of economic convergence and divergence in the World System, because there are very strong cyclical ups and downs of relative convergence in the World System in comparison to world averages or leading economies, and not just in ‘national’ growth rates and ‘national’ economic cycles. Already the Japanese economist Kaname Akamatsu, who lived from August 7, 1896 to December 20, 1974, and who was a great admirer of Kondratieff, hinted at this connection. His most well-known tribute to Kondratieff (Akamatsu 1961) specifically links the rise and decline of the global peripheries to the larger Kondratieff cycle. In this article, we attempt to establish the empirical relationship between the Kondratieff cycles and the Akamatsu cycles, using advanced quantitative techniques with the Maddison data base, covering 31 countries. The Akamatsu cycles, analyzed in this work, are even stronger and seem to be more devastating than the ‘national waves’ and the global World Systemic waves themselves. There is a double-Tsunami wave structure of crises in the world economy. In addition, we show that the purchasing power shortfalls during the 2007 crisis were biggest in Japan, Italy, Denmark, France and Germany.

Our re-analysis of global cycles and national cycles as well as cycles of global convergence and divergence also revealed the existence of the 36-year Barro cycles and the 140-year Wallerstein cycles.

For the first time in the literature, we also tried to analyze in a more systematic fashion the cycles of convergence and divergence on a global level.

**Keywords:** Kondratieff, long waves, business cycles.

The recurrence of major world economic downturns and depressions, such as the one which began in 1929 and 2007, are linked forever with the name of the

Kondratieff Waves: Juglar - Kuznets - Kondratieff 2014 181-250
Russian economist Nikolai Dmitriyevich Kondratieff (Николай Дмитриевич Кондрáтьев; 4 March 1892 – 17 September 1938). If the crash of 2007/2008 is but a continuation of the earlier economic major downturns in the 1970s, the 1930s, the 1890s and 1850s, then the prospects for the semi-peripheries in Europe's South and in Ireland, recently referred to in the economics profession as the 'PIIGS countries', are even grimmer. And if we manage to show convincingly that these countries, in addition to suffering a 'national' long-term downswing, are also caught in the long-term downturn of their once so successful convergence and catching-up process with the capitalist centers, then we realize how much of an economic and social tsunami we are now confronting in the European South.

## Preamble

For some time now, economic science took up the issue of long-term time series analysis anew in the context of the 'Kondratieff cycles' of 50 to 60 years duration (see, among others Devezas 2006, 2010, 2012; Devezas and Corredine 2001; Diebolt and Escudier 2002; Goldstein 1988; based on Kondratieff 1925, 1926, 1928, 1935; on time series analysis see Diebold, Kilian and Nerlove 2008). The aim of this article, which tries to test recent massive evidence<fnref n="1" /> on the issue of long cycles, is to re-assess the entire question of Kondratieff cycles within this larger center-periphery frame of reference. To facilitate future Kondratieff cycle research, we have made our interpretations of our data series, that is time series plots, spectral periodograms and spectral density graphs, rolling correlations and regressions freely available on the Internet together with some important EXCEL file sheets.

Recent 'mainstream' economic theory (Barro and Ursua 2008; Barro et al. 2013), working with its own version of the Maddison data set about real income convergence/divergence in 30+ countries in the world since the 19th century (Bolt and van Zanden 2013), without mentioning the name of Kodratieff, took up anew the issue of long economic cycles under the heading of 'consumption disasters',<fnref n="2" /> and came conclusions which at least render some support for Kondratieff hypotheses, i.e. there are indeed major long-run economic upheavals with a frequency of 30-40 years.

Our work aims to link the issue of long cycles with the issue of economic convergence and divergence, because the startling discovery, which one makes upon closer inspection of the trajectories of economic convergence in 31 countries with the newly available Maddison data set since the 19th century (Bolt and van Zanden 2013), is that there are indeed very strong cyclical ups and

<footnote n="1">¹ All the evidence and sources are available from https://www.academia.edu/3742045/Background_materials_to_the_article_The_hallmarks_of_crisis._A_new_center-periphery_perspective_on_longala_gy</footnote>

<footnote n="2">² Barro made available his own, recalculated version of the Maddison data set under: http://rbarro.com/data-sets/</footnote>
downs of the relative convergence of these countries in relationship to the
real GDP per capita at the world level and in the capitalist system's leading
economies, such as the United Kingdom and the United States of America,
and not just in their own 'national' growth rates and national economic
cycles. In fact, these cycles are even stronger and seem to be more devastating
than the 'national waves' themselves, leading to the discovery of a double-
tsunami wave structure.

Kondratieff was Russian, and a look at the relative position of his home
country, measured by Russian/USSR constant GDP per capita in real purchas-
ing power parity as a percentage of global average constant GDP per capita in
real purchasing power parity just shows how dramatic these long-term tsuna-
mi waves of global convergence/divergence with a duration of up to 70 or
90 years can be. Thus, Russia fell two times within the time-span of 100 years
from the comfortable position of the world's income middle class to the level of
the world's lower class:

<figure><img src="image_33.png" /><figcaption>**Graph 1.** Former USSR/Russian constant GDP per capita in real purchasing power parity as a per cent of global average constant GDP per in real purchasing power parity. Time series from 1885 to 2010</figcaption></figure>

Legend: our own compilations, based on the Maddison data sets, as documented in Bolt and van Zanden 2013. Calculated from the original data with Microsoft EXCEL 2010. The time series of real GDP per capita is expressed in constant 1990 $ for the following countries since 1885 (1942–1948 were omitted): Argentina; Australia; Austria; Belgium; Brazil; Canada; Chile; Colombia; Denmark; England/GB/UK; Former USSR/Russia; Finland; France; Germany; Greece; Holland/Netherlands; India; Indonesia (Java before 1880); Italy; Japan; New Zealand; Norway; Peru; Portugal; Spain; Sri Lanka; Sweden; Switzerland; Uruguay; USA; Venezuela.

Source: http://www.ggdc.net/maddison/maddison-project/home.htm
An unexpected Kondratieff revival might be happening again, this time, perhaps, via the important link between the theory of global income convergence, best captured by the works of the late Italian American world-system researcher Giovanni Arrighi and the Japanese economist Kaname Akamatsu, who lived from August 7, 1896 to December 20, 1974. Since Akamatsu's contributions appeared much earlier than Arrighi's, let us mention here Akamatsu, and we will deal later on with Arrighi's contribution. In Akamatsu's theory, there are important links between his 'flying geese' (Gankō Keitairon) model and Kondratieff's ideas. This 'flying geese' model was first proposed in a far-reaching and long tribute to Kondratieff's theory published internationally in 1961. The most well-known tribute to Kondratieff by Akamatsu, that is Akamatsu, 1961 (which was originally published in Japan already in 1937) specifically links the rise and decline of the global peripheries to the larger Kondratieff cycle. The very essence of the 'flying geese' and the K-cycle is that the two processes are intractably linked together, and that one cannot separate the one from the other.

Recent contributions in international social science have begun to approach these issues of the evolution of international convergence on the basis of the Maddison data since the 1870s, without, however, mentioning Akamatsu's economic framework, and without employing econometric time series analysis techniques (Rasler and Thompson 2009; Reuveny and Thompson 2008). Giovanni Arrighi also seems to have been very conscious about this problem as well, which is now hitting with the devastating force of a social tsunami his country of birth, and his world-system theory clearly distinguished between the centers, the semi-peripheries and the peripheries, and highlights the fact that some semi-peripheries rise while others stumble on their development paths (Arrighi 1995; Arrighi, Silver and Brewer 2003).

The title of this article, its style and its way of presentation are meant as a concrete tribute to medicine, and here to the path-breaking article on cancer research by Hanahan and Weinberg (2000), which received more than 10,000 quotations in world scientific literature, as documented by the Thomson Reuters *Web of Knowledge* since its publication more than a decade ago. So the theoretical apparatus will be only briefly mentioned in a section 'background', like in the medical journals, while ample space will be given to the presentation of the methodology and the 'clinical results'.

The spirit of the day in Europe is not as equally monolithic as the one existing in Russia in the 1930s, but also this time it is being maintained very uniformly that there is no alternative. This time, it is being said that for the European periphery there is no alternative but to continue to be members of the Eurozone and to be subjected to the phlebotomy (bloodletting) of austerity packages under the auspices of the European Commission, while in reality the dis-
covery of the organizing principles for rationalizing the complexities of the
disease of stagnation and recession are being called for (in accordance with
the terminology of the famous articles on cancer by Hanahan and Weinberg
2000, 2011).

Background

Recent econometric literature, large-scale evidency by Korotayev and Grinin (2012) and Korotayev and Tsirel (2010), to the contrary, has taken a very skeptical view of the entire question of Kondratieff cycles (Diebolt 2012; Diebolt and Doliger 2006). But inspired by the recent work of Barro and associates, the author of this article proposes a new direction: to look at the totality of the countries contained in the Maddison data set, centers and peripheries alike, and to look also into the real income gaps between the centers and the peripheries in the course of the long economic cycles. And such question writing leads us back a long time in the history of economic thought to the year 1961, when the works of a Japanese follower of Kondratieff, Akamatsu, became known to a larger public in the West.

The notable trend in the reception of Kondratieff's works by Akamatsu is
that he puts the ‘differentiation’ of the world economy into the center of his
theoretical developments (Akamatsu 1961). The differentiation of the world
economy leads to the rapid diffusion of new techniques to rising industrial na-
tions, which starts with the import of new commodities by these nations.
In time, techniques and capital goods are imported as well, and homogenous
industries are being established. The uniformization of both industry and agri-
culture gave rise to the fierce and conflictive competition between Europe,
the United States and Japan in the last quarter of the 19th century. When an in-
novation occurs in some industry in an advanced nation, investment is concen-
trated there, causing a rise in the trade cycle. Innovation leads to an increase in
exports, and the nation's prosperity creates and increases the import of raw ma-
terials and foodstuffs. Akamatsu sees a counter-movement in other parts of the
world, centered on the rising production of gold, which, according to him, leads
to an increase in effective demand and further stimulates exports of the innovat-
ing nation. In that way, world production and trade expand, prices increase and
a world-wide rise in the long-term trade cycle results.

However, innovations spread from the innovating nations to other nations,
leading to the development of industries in those countries, with the result of
a conflictive relationship with the industries of the innovating nation. Exports
of the innovating nation become stagnant, and on the world level, there is a
tendency towards overproduction, prices turn downwards, and the rates of
growth of production and trade fall. That what later K-cycle researchers tended
to call the first, rising A-phase of the cycle will be according to Akamatsu
a period of differentiation in the world economic structure, while the ‘falling
period’ (or B-phase of the cycle) will, Akamatsu argues, coincide with a pro-
cess of uniformization in the world economic structure. Graph 2 supports the contention by Akamatsu that the A-phases of long upswings in the world economy widen international inequalities, while the B-phases of long decline reduce constant real international GDP per capita purchasing power differences:

<figure><img src="image_34.png" /><figcaption>**Graph 2.** The coefficient of variation of constant real world GDP per capita incomes in purchasing power parity rate according to the Maddison data base (31 countries)</figcaption></figure>

*Legend*: our own compilations, based on the Maddison data sets, as documented in Bolt and van Zanden 2013. Calculated from the original data with Microsoft EXCEL 2010.

For Akamatsu, the characteristic structure of the Center-Periphery relationship is characterized by the fact that the underdeveloped nation will export primary products and will import industrial goods for consumption. Later on, an underdeveloped nation will attempt to produce goods which were hitherto imported, first in the field of consumer goods, and later on in the area of capital goods. At the fourth stage of the process, the underdeveloped nation will attempt to export capital goods. There will be a tendency of ‘advanced’ differentiation in the world economy, however, because the capital goods industries in advanced nations will still advance further, giving rise to ‘extreme differences of comparative costs’. The wild-geese flying pattern will include three sub-patterns: the first is the sequence of imports – domestic production – exports. The second will be the sequence from consumer goods to capital goods and from crude and simple articles to complex and refined articles. The third will be the alignment from the advanced nations to backward nations according to their stages of growth.

However, there is a darker and more somber nature of these cycles as well – the condition of discrepancy will be met, Akamatsu argues, by means of imports, leading to discrepancies in the balance of payments, and the pressure
to increase exports of primary products to improve the balance. Discrepancies
will also lead to a shift of production away from domestic industries in the un-
derdeveloped country towards the export sector, leading, in the end, also to
problems of excessive supply capacities in the underdeveloped country, etc.
Arrighi, Silver and Brewer (2003) further developed these arguments, put for-
ward by Akamatsu, and consciously link their theoretical advances also with
the models implied in the works of Raymond Vernon (1966), which specifies
the life cycle of a product as defined by introduction, growth, maturity, satura-
tion, and decline.

Methodology and Data

To test the fascinating totality of such an approach is not an easy task. Our data
for world industrial production growth are an extension of the ample materials,
first presented by Goldstein (1988), updated by Tausch and Ghymers (2007),
relying on UNIDO data on world-wide industrial production growth from the
mid-1970s to the turn of the millennium, now updated by open access figures
from the United States Central Intelligence Agency (CIA 2013). Our figures on
major power wars were first presented by Goldstein (1988), updated by PRIO
data (major power wars) until 2002 (fully documented in Tausch and Ghymers
2007). Our data for the 31 countries under scrutiny here are exclusively based
on Angus Maddison's widely received research; as freely downloadable in Bolt
and van Zanden (2013), for further debates see also Maddison (2003, 2007).
These countries currently make up approximately 40.8 % of global population
and 57.8 % of global purchasing power. Appendix 1 and 2 further highlight our
freely available data. At the website Academia.edu<fnref n="3" /> readers can download the
most important data and also hundreds of spectral density graphs, rolling corre-
lations and regressions, autocorrelation analyses at the level of the World Sys-
tem and at the level of the 31 analyzed countries.

Our article is based on a standard IBM-SPSS 21 time series analysis of the
data, and all the used methods and their algorithms are fully available to the
international public.<fnref n="4" /> For that reason, we refrain from reproducing the mathemat-
matical formula, which interested readers might easily download from the
freely available IBM internet documentation, if they are not very familiar with
the mathematical formulas anyway:

* As to correlations, we used standard Pearson-Bravais correlation co-
efficients. In calculations not reported here also multivariate analyses (principal
components) were used (Blalock 1972; Dziuban and Shirkey 1974; Harman
1976; and Rummel 1970). ‘Rolling’ regressions and correlations are quite

<footnote n="3">³ See https://www.academia.edu/3742045/Back ground_materials_to_the_article_The_hallmarks_ of_crisis_A_new_center-periphery_perspective_on_long_cycles</footnote>

<footnote n="4">⁴ See IBM-SPSS Statistics 20 Algorithms. at http://www-01.ibm.com/support/docview.wss?uid=swg27021213#en</footnote>
a powerful and straightforward instrument of the analysis of time-series and became more popular in recent times in the framework of financial market trend analysis and the necessity to have easily interpretable and reliable instruments of analysis at hand (Perman and Tavera 2005; Smith and Taylor 2001; Tang 2010; Zivot and Wang 2006; furthermore: Cook 1977; Dempster 1969; Velleman and Welsch 1981).

* Throughout this work, we use 25 year (Kondratieff cycles, 2 × 25 years = 50 years) and 75 year periods (war cycles, 2 × 75 years = 150 years) for the moving time window of regression/correlation analysis. We also used shorter windows to reproduce the Barro, the Kuznets and the Juglar cycles.

* Our analyses of **autocorrelation** and **cross-correlation** are based on the standard **IBM-SPSS ACF** and **CCF algorithm**, which are based on Bartlett (1946); Box and Jenkins (1976); Cryer (1986); and Quenouville (1949) (**auto-correlation**) and Box and Jenkins (1976) (**cross-correlation**). Our graphs also for the inspection of longer time series. In presenting the graphs, we also took care of the better visibility of the significant results.

* The **IBM-SPSS spectral density routine**, which is based on the methodological developments, presented by Bloomfield (1976), and Fuller (1976), was performed by using the IBM-SPSS default options; the chosen window was most of the time the Tukey-Hamming window with three periods. We also tested the validity of our main results with longer windows as well. As we demonstrate however in our non-mathematical primer on spectral density analysis,<fnref n="5" /> longer windows seem to distort the results even of simulated time series, where we really know the length of the oscillations, and they do not really help us to discover the real periodicity of the oscillations in question, especially when we are confronted with the already mentioned ‘Devezas’ paradox of longer cycles and ‘nested’ shorter cycles. We use both the standard IBM-SPSS periodograms and the spectral density graphs, and add that standard econometric methodological literature usually maintains that the periodograms are not the best estimator of the spectrum because it is not convergent (Diebolt 2012).

## Results on the Level of World Industrial Production Growth since 1740 to 2011

Our results on the level of the world economy are a resounding ‘yes’ for the hypotheses voiced by Kondratieff, as re-analyzed by Korotayev and Grinin (2012), and Korotayev and Tsirel (2010), but with several additional qualifications and extensions. Reasons of available journal printing space do not permit us to present all the results of this project, so we concentrate on only the most important tendencies and invite the specialists among our readers to the website

<footnote n="5">⁵ Available at https://www.academia.edu/3742045/Background_materials_to_the_article_The_hallmarks_of_crisis_A_new_center-periphery_perspective_on_long_cycles</footnote>
Academia.edu with all the necessary data and results. Kondratieff was right in analyzing a 54-year cycle of the real economy as well, but there are other important cycles too; some of them very well known to social science researchers, others perhaps still more to be explored.

On the level of industrial production growth in the world economy, there is – parallel to the Kondratieff cycle – a 140-year ‘logistic’ cycle, first analyzed by Immanuel Wallerstein; and in addition, there is this new 36-year disaster cycle, correctly predicted by the neoclassical contemporary economist Robert Barro. For sure, there is also evidence – although somewhat weaker than expected – for a 22–23-year Kuznets cycle and the shorter, well-known Juglar cycles and Kitchin cycles. Graph 2 portrays the original data series from 1741 to 2011, and Graph 8 – the result of our ‘rolling correlation’ exercise.

<figure><img src="image_35.png" /><figcaption>**Graph 3.** World industrial production growth, 1741–2011 – the untransformed annual growth raw data</figcaption></figure>

*Legend:* our own calculations from the data set ‘Kondratieff Cycles and War Cycles’ contained in https://www.academia.edu/3742045/Background_materials_to_the_article_The_hallmarks_of_crisis._A_new_center-periphery_perspective_on_long_cycles. As to the documentation, see also: Tausch and Ghymers 2007, and Appendix 1 and 2 of this work. Our calculations are based on the IBM-SPSS XXI and Microsoft EXCEL 2010 statistical software.
<figure><img src="image_36.png" /></figure>

**Graph 4.** The 'rolling' 25-year correlation analysis of these data reveals interesting results of the deeper underlying trends, 1741-2011.

*Legend*: our own calculations from the data set 'Kondratieff Cycles and War Cycles' contained in https://www.academia.edu/3742045/Background_materials_to_the_article_The_hallmarks_of_crisis._A_new_center-periphery_perspective_on_long_cycles. As to the documentation, see also: Tausch and Ghymers 2007, and Appendix 1 and 2 of this work. Our calculations are based on the IBM-SPSS XXI and Microsoft EXCEL 2010 statistical software.

Graphs 5 and 6 reproduce the main results of the spectral analysis of the cyclical movements in the original, untransformed data. The Kuznets cycle, the Barro cycle, the Kondratieff cycle and the Wallerstein logistic cycle are all confirmed in their existence. Appendix 3 mentions results, which relied on a prior 5-year moving average transformation of the original data in the tradition of the important Korotayev and Tsirel study (2010).
<figure><img src="image_37.png" /><figcaption>**Graph 5.** The periodogram from IBM-SPSS spectral analysis: short-term fluctuations, the Kuznets cycles, the Barro cycles, the Kondratieff cycles, and a 130-140-year cycle (Wallenstein's 'logistic cycle')</figcaption></figure>

*Legend*: our own calculations from the data set 'Kondratieff Cycles and War Cycles' contained in https://www.academia.edu/3742045/Background_materials_to_the_article_The_hallmarks_of_crisis. A_new_center-periphery_perspective_on_lo ng_cycles. As to the documentation, see also: Tausch and Ghymers 2007, and Appendix 1 and 2 of this work. Our calculations are based on the IBM-SPSS XXI and Microsoft EXCEL 2010 statistical software.
<figure><img src="image_38.png" /><figcaption>**Graph 6.** Spectral density analysis of world industrial production growth, 1741–2011</figcaption></figure>

*Legend*: our own calculations from the data set 'Kondratieff Cycles and War Cycles' contained in https://www.academia.edu/3742045/Background_materials_to_the_article_The_hallmarks_of_crisis._A_new_center-periphery_perspective_on_long_cycles. As to the documentation, see also: Tausch and Ghymers 2007, and Appendix 1 and 2 of this work. Our calculations are based on the IBM-SPSS XXI and Microsoft EXCEL 2010 statistical software.

Thus, spectral density analysis of the untransformed global data indeed suggests that, on the world level, there are all the cycles at work, which have been discussed for decades now in economic research. Also autocorrelation analysis supports the claims of the K-cycle researchers:
<figure><img src="image_39.png" /><figcaption>**Graph 7.** Autocorrelation analysis of world industrial production growth, 1741-2011</figcaption></figure>

*Legend*: our own calculations from the data set 'Kondratieff Cycles and War Cycles' contained in https://www.academia.edu/3742045/Background_materials_to_the_article_The_hallmarks_of_crisis._A_new_center-periphery_perspective_on_long_cycles. As to the documentation, see also: Tausch and Ghymers 2007, and Appendix 1 and 2 of this work. Our calculations are based on the IBM-SPSS XXI and Microsoft EXCEL 2010 statistical software.

Graph 8 draws the attention of our readers to a type of cycle, really neglected in empirical K-wave research: the Wallerstein logistic cycle, whose shape suggests that the current crisis heralds the beginning of a trough along the oscillations of this cycle. In terms of its statistical qualities, this cycle is about equal in strength to the Kondratieff cycle. There is strong reason to believe that the Wallerstein cycle is closely connected to the issue of leadership in the international system. The period from the end of the Napoleonic Wars to the Great Depression in the 1930s was the period of the British dominance in the world economy, while the U.S. hegemony evolved as a result of World War II and seems to be declining:
<figure><img src="image_40.png" /><figcaption>**Graph 8.** The Wallerstein logistic cycle – 75-year rolling regressions</figcaption></figure>

*Legend*: our own calculations from the data set 'Kondratieff Cycles and War Cycles' contained in https://www.academia.edu/3742045/Background_materials_to_the_article_The_hallmarks_of_crisis._A_new_center-periphery_perspective_on_long_cycles. As to the documentation, see also: Tausch and Ghymers 2007, and Appendix 1 and 2 of this work. Our calculations are based on the IBM-SPSS XXI and Microsoft EXCEL 2010 statistical software.

In Appendix 3, we also document our results based on a 5-year moving averages research design, based on the original data. The 5-year moving averages design should serve to replicate the results, achieved by Korotayev and Tsirel, (2010), who also used such 5-year moving averages. Also this exercise neatly reproduces our results mentioned above. The Kuznets, Barro, Kondratieff and Wallerstein cycles re-appear in the periodogram for that research design (see also our periodogram for the periods 0–70 years with a wider spread); while there is also a confirmation of our hypothesis about the Kuznets, Barro, Kondratieff and Wallerstein cycles in the spectral density graphs under the assumption of a window (Tukey-Hamming) of three periods. In the spectral density diagram, the IBM-SPSS results suggest talking about a cycle length of 45 years for the Kondratieff cycle, but in accordance with the periodogram, the analysis of autocorrelation suggests a longer cycle. The strength of the Wallerstein cycle is again shown to be considerable.

**New Evidence on Economic Cycles in 31 Countries of the World System and the Discovery of the Akamatsu Cycle**

Tables 3 and 4 present the main results of our analysis of the Maddison data set. Kondratieff cycles of around 60 years duration are most clearly visible
in the periodograms for Argentina, Canada, and Russia, which are all semi-peripheries with a considerable dependency from their raw material exports.<fnref n="6" />

We also found evidence on the existence of longer cycles of more than 35 years in Belgium, Chile, Greece, Netherlands, India, New Zealand, Spain, and the USA while for the other countries, the spectral density analysis results reported in the work of Diebolt and Doliger (2006) could not be falsified.

<table><caption>**Table 1.** The Kondratieff cycles in the countries of the World System</caption><thead><tr><th>Country</th><th>The length of K-cycles (years), as suggested by the Periodograms</th></tr><tr><th>1</th><th>2</th></tr></thead><tbody><tr><td>Argentina</td><td>20 and 60</td></tr><tr><td>Australia</td><td>20 and 30</td></tr><tr><td>Austria</td><td>20</td></tr><tr><td>Belgium</td><td>20 and 38</td></tr><tr><td>Brazil</td><td>20 and 30</td></tr><tr><td>Canada</td><td>18 and 58</td></tr><tr><td>Chile</td><td>15 and 38</td></tr><tr><td>Colombia</td><td>20 and 30</td></tr><tr><td>Denmark</td><td>15 and 30</td></tr><tr><td>UK</td><td>15 and 30</td></tr><tr><td>Russia</td><td>18 and 22 and 58</td></tr><tr><td>Finland</td><td>25</td></tr><tr><td>France</td><td>18</td></tr><tr><td>Germany</td><td>14 and 22</td></tr><tr><td>Greece</td><td>15 and 25 and 40</td></tr><tr><td>Netherlands</td><td>20 and 40</td></tr><tr><td>India</td><td>25 and 40</td></tr><tr><td>Indonesia</td><td>20</td></tr><tr><td>Italy</td><td>18</td></tr><tr><td>Japan</td><td>15</td></tr><tr><td>New Zealand</td><td>20 and 40</td></tr><tr><td>Norway</td><td>18 and 30</td></tr><tr><td>Peru</td><td>20</td></tr><tr><td>Portugal</td><td>30</td></tr><tr><td>Spain</td><td>40</td></tr><tr><td>Sri Lanka</td><td>15</td></tr><tr><td>Sweden</td><td>16</td></tr><tr><td>Switzerland</td><td>16</td></tr></tbody></table>

<footnote n="6">⁶These periodograms and other econometric time series tests are available from https://www.academia.edu/3742045/Background_materials_to_the_article_The_hallmarks_of_crisis._A_new_center-periphery_perspective_on_long_cycles</footnote>
<table><tr><td>1</td><td>2</td></tr><tr><td>Uruguay</td><td>20</td></tr><tr><td>USA</td><td>20 and 40</td></tr><tr><td>Venezuela</td><td>20</td></tr></table>

Note: for the 31 nations trajectories, see https://www.academia.edu/3742045/Background_materials_to_the_article_The_hallmarks_of_crisis._A_new_center-periphery_perspective_on_long_cycles

Appendix 4 and 5 as well as the numerous other background data, presented in academia.edu,<fnref n="7" /> highlight the Akamatsu cycles in 31 countries of the world economy since 1885.

In Table 2, we test the crucial relationships of the Akamatsu cycles and the cross correlation relationship between the Akamatsu cycle and the Kondratieff cycle.

<table><caption>**Table 2.** The length of the Akamatsu cycles and the relationship between the K-cycles and the Akamatsu cycles in 30 countries of the world</caption><thead><tr><th>Country</th><th>The length of Akamatsu cycles (years), as suggested by the periodograms based on the original convergence data with the USA</th><th>Time series cross-correlation analysis suggests the following causality</th></tr><tr><th>1</th><th>2</th><th>3</th></tr></thead><tbody><tr><td>Argentina</td><td>no significant result</td><td>A&gt;K</td></tr><tr><td>Australia</td><td>20 and 40</td><td>A&gt;K</td></tr><tr><td>Austria</td><td>no significant result</td><td>K&gt;A</td></tr><tr><td>Belgium</td><td>40</td><td>K&gt;A</td></tr><tr><td>Brazil</td><td>40</td><td>K&gt;A</td></tr><tr><td>Canada</td><td>30</td><td>K&gt;A</td></tr><tr><td>Chile</td><td>25</td><td>K&gt;A</td></tr><tr><td>Colombia</td><td>60</td><td>K&gt;A</td></tr><tr><td>Denmark</td><td>20 and 30</td><td>A&gt;K</td></tr><tr><td>UK</td><td>40</td><td>K&gt;A</td></tr><tr><td>Russia</td><td>60</td><td>K&gt;A</td></tr><tr><td>Finland</td><td>30</td><td>A&gt;K</td></tr><tr><td>France</td><td>40</td><td>K&gt;A</td></tr><tr><td>Germany</td><td>20 and 40</td><td>K&gt;A</td></tr><tr><td>Greece</td><td>40</td><td>A&gt;K</td></tr><tr><td>Netherlands</td><td>40</td><td>A&gt;K</td></tr></tbody></table>

<footnote n="7">⁷ Available at https://www.academia.edu/3742045/Background_materials_to_the_article_The_hallmarks_of_crisis._A_new_center-periphery_perspective_on_long_cycles</footnote>
<table><thead><tr><th>1</th><th>2</th><th>3</th></tr></thead><tbody><tr><td>India</td><td>30 and 40</td><td>K>A</td></tr><tr><td>Indonesia</td><td>30 and 40</td><td>K>A</td></tr><tr><td>Italy</td><td>no significant result</td><td>K>A</td></tr><tr><td>Japan</td><td>30</td><td>K>A</td></tr><tr><td>New Zealand</td><td>30</td><td>K>A</td></tr><tr><td>Norway</td><td>20 and 30</td><td>K>A</td></tr><tr><td>Peru</td><td>40</td><td>K>A</td></tr><tr><td>Portugal</td><td>30</td><td>K>A</td></tr><tr><td>Spain</td><td>18</td><td>A>K</td></tr><tr><td>Sri Lanka</td><td>40</td><td>K>A</td></tr><tr><td>Sweden</td><td>20 and 30</td><td>K>A</td></tr><tr><td>Switzerland</td><td>25 and 40</td><td>K>A</td></tr><tr><td>Uruguay</td><td>20</td><td>K>A</td></tr><tr><td>Venezuela</td><td>no significant result</td><td>K>A</td></tr></tbody></table>

Note: for the 31 nations trajectories, see https://www.academia.edu/3742045/ Background_materials_to_the_article_The_hallmarks_of_crisis._A_new_center-periphery_perspective_on_long_cycles

Table 3 highlights another important consequence of our research for the study of World System dynamics. In that Table, we highlight the ‘convergence slopes’ of the countries of the World System with available data in terms of their GDP per capita distance, parity or superiority with the county which dominated the capitalist World System right to the time of the Great Depression, the United Kingdom. In the same way, we can also analyze the worst time series performances of the purchasing power of countries in relationship to that of the United Kingdom.

<table><caption>**Table 3.** The Akamatsu cycle and convergence with the United Kingdom – convergence slopes in the Kondratieff cycles, 1885–2010</caption><thead><tr><th>Country</th><th>Cycle 1885–1913</th><th>Cycle 1914–1932</th><th>Cycle 1933–1953</th><th>Cycle 1954–1973</th><th>Cycle 1974–1992</th><th>Cycle 1993–2010</th></tr></thead><tbody><tr><td>1</td><td>2</td><td>3</td><td>4</td><td>5</td><td>6</td><td>7</td></tr><tr><td>Argentina</td><td>0,519</td><td>0,961</td><td>0,154</td><td>-0,003</td><td>-1,734</td><td>-0,495</td></tr><tr><td>Australia</td><td>-0,474</td><td>-0,055</td><td>0,814</td><td>0,502</td><td>-0,404</td><td>-0,139</td></tr><tr><td>Austria</td><td>0,405</td><td>1,024</td><td>0,075</td><td>1,575</td><td>0,192</td><td>-0,317</td></tr><tr><td>Belgium</td><td>0,009</td><td>1,527</td><td>-0,222</td><td>1,255</td><td>-0,153</td><td>-0,552</td></tr><tr><td>Brazil</td><td>-0,159</td><td>0,290</td><td>0,258</td><td>0,279</td><td>-0,387</td><td>-0,219</td></tr><tr><td>Canada</td><td>1,360</td><td>0,125</td><td>2,427</td><td>0,632</td><td>-0,494</td><td>-0,435</td></tr></tbody></table>
<table><thead><tr><th>1</th><th>2</th><th>3</th><th>4</th><th>5</th><th>6</th><th>7</th></tr></thead><tbody><tr><td>Chile</td><td>0,400</td><td>-0,073</td><td>0,412</td><td>-0,243</td><td>0,042</td><td>0,376</td></tr><tr><td>Colombia</td><td>-0,130</td><td>0,728</td><td>0,126</td><td>-0,099</td><td>-0,106</td><td>-0,198</td></tr><tr><td>Denmark</td><td>0,707</td><td>1,631</td><td>0,229</td><td>1,363</td><td>-0,108</td><td>-1,143</td></tr><tr><td>USSR/Russia</td><td>0,195</td><td>0,456</td><td>0,552</td><td>0,472</td><td>-0,798</td><td>0,516</td></tr><tr><td>Finland</td><td>0,316</td><td>1,104</td><td>0,621</td><td>1,407</td><td>0,342</td><td>0,479</td></tr><tr><td>France</td><td>0,324</td><td>1,645</td><td>0,170</td><td>1,658</td><td>-0,281</td><td>-1,042</td></tr><tr><td>Germany</td><td>0,486</td><td>1,093</td><td>-0,847</td><td>1,468</td><td>-0,185</td><td>-1,061</td></tr><tr><td>Greece</td><td>-0,171</td><td>1,377</td><td>-0,878</td><td>1,767</td><td>-0,290</td><td>0,357</td></tr><tr><td>Holland/Netherlands</td><td>-0,229</td><td>2,032</td><td>-0,033</td><td>1,125</td><td>-0,615</td><td>-0,494</td></tr><tr><td>India</td><td>-0,021</td><td>0,014</td><td>-0,186</td><td>-0,078</td><td>0,041</td><td>0,276</td></tr><tr><td>Indonesia (Java before 1880)</td><td>-0,054</td><td>0,190</td><td>-0,309</td><td>-0,062</td><td>0,156</td><td>-0,044</td></tr><tr><td>Italy</td><td>0,069</td><td>0,597</td><td>0,184</td><td>2,005</td><td>0,489</td><td>-1,376</td></tr><tr><td>Japan</td><td>0,163</td><td>0,432</td><td>-0,524</td><td>3,545</td><td>1,230</td><td>-1,711</td></tr><tr><td>New Zealand</td><td>0,693</td><td>-0,765</td><td>1,199</td><td>-0,566</td><td>-1,229</td><td>-0,393</td></tr><tr><td>Norway</td><td>0,171</td><td>1,066</td><td>0,847</td><td>0,845</td><td>0,773</td><td>-0,504</td></tr><tr><td>Peru</td><td>0,306</td><td>0,651</td><td>0,200</td><td>0,072</td><td>-1,038</td><td>0,155</td></tr><tr><td>Portugal</td><td>-0,096</td><td>0,472</td><td>0,078</td><td>1,410</td><td>0,560</td><td>-0,544</td></tr><tr><td>Spain</td><td>-0,062</td><td>0,660</td><td>-0,337</td><td>1,630</td><td>0,181</td><td>-0,187</td></tr><tr><td>Sri Lanka</td><td>0,050</td><td>0,058</td><td>-0,170</td><td>-0,224</td><td>0,150</td><td>0,249</td></tr><tr><td>Sweden</td><td>0,595</td><td>1,334</td><td>1,250</td><td>1,104</td><td>-0,639</td><td>0,245</td></tr><tr><td>Switzerland</td><td>1,132</td><td>2,110</td><td>-0,239</td><td>0,887</td><td>-1,187</td><td>-1,213</td></tr><tr><td>Uruguay</td><td>-0,029</td><td>1,329</td><td>0,787</td><td>-1,495</td><td>-0,398</td><td>-0,219</td></tr><tr><td>USA</td><td>0,921</td><td>0,987</td><td>2,808</td><td>0,384</td><td>0,103</td><td>-1,007</td></tr><tr><td>Venezuela</td><td>-0,135</td><td>2,742</td><td>3,274</td><td>-1,510</td><td>-2,513</td><td>-0,711</td></tr></tbody></table>

Note: for the 31 nations trajectories, see https://www.academia.edu/3742045/Backround_materials_to_the_article_The_hallmarks_of_crisis._A_new_centerperiphrery_perspective_on_longala
New Insights into the Kondratieff Cycle Dating Game

Our research also sheds lights on the necessary reformulation of Kondratieff cycle dating schemes and the assessment of the current crisis, which began in 2007. As shown in Graph 9, there is good reason to believe that the current crisis is NOT a Kondratieff cycle low (which hit the world economy in the late 1980s, culminating in the disintegration of Communist rule in Eastern Europe and the end of the Soviet Union), but the beginning of a downswing phase of the 140-year Wallerstein cycle.

<figure><img src="image_41.png" /><figcaption>**Graph 9.** The 54-year Kondratieff cycle and the 140-year Wallerstein cycle since 1950</figcaption></figure>

*Legend*: our own calculations from the data set 'Kondratieff Cycles and War Cycles' contained in https://www.academia.edu/3742045/Background_materials_to_the_article_The_hallmarks_of_crisis._A_new_center-periphery_perspective_on_long_cycles. As to the documentation, see also: Tausch and Ghymers (2007), and Appendix 1 and 2 of this work. Our calculations are based on the IBM-SPSS XXI and Microsoft EXCEL 2010 statistical software.

Graphs 10 and 11 show that the big difference between the current crisis and the Great Depression starting in 1929 is that in 1929, ALL cycle troughs coincided, while in the crisis of 2007 until today, such an occurrence of ALL the cyclical troughs is just not the case. This is the main reason why the current
crisis is far from being the ‘final crisis of capitalism’, and why social science
today can learn a lot from Kondratieff’s stubborn resistance to similar theses
advanced at the time of the Great Depression.

**Rolling correlation windows:**

8 = 16 year Juglar cycle

11 = 22 year Kuznets cycle

18 = 36 year Barro cycle (secondary axis, right hand scale)

27 = 54 year Kondratieff cycle (secondary axis, right hand scale)

70 = 140 year Wallerstein cycle (secondary axis, right hand scale)

<figure><img src="image_42.png" /><figcaption>**Graph 10.** The unique character of the Great Depression, 1929: all cycles hit the world economy at once</figcaption></figure>

*Legend*: our own calculations from the data set ‘Kondratieff Cycles and War Cycles’ contained in https://www.academia.edu/3742045/Background_materials_to_the_article_The_hallmarks_of_crisis._A_new_center-periphery_perspective_on_long_cycles. As to the documentation, see also: Tausch and Ghymers (2007), and Appendix 1 and 2 of this work. Our calculations are based on the IBM-SPSS XXI and Microsoft EXCEL 2010 statistical software.
<figure><img src="image_43.png" /><figcaption>**Graph 11.** By contrast: in 2007, the world economy was NOT affected by such a unique combination of downward trends</figcaption></figure>

*Legend*: our own calculations from the data set 'Kondratieff Cycles and War Cycles' contained in https://www.academia.edu/3742045/Background_materials_to_the_article_The_hallmarks_of_crisis._A_new_center-periphery_perspective_on_long_cycles. As to the documentation, see also: Tausch and Ghymers (2007), and Appendix 1 and 2 of this work. Our calculations are based on the IBM-SPSS XXI and Microsoft EXCEL 2010 statistical software.

**Discussion and Conclusions**

Our re-analysis of the entire issue of global cycles and national cycles as well as cycles of global convergence and divergence revealed that Kondratieff cycles exist, but that there are other types of cycles as well in the global economy, among them two cycles hitherto virtually neglected in quantitative research on the subject – the 36-year Barro cycle and the 140-year Wallerstein cycle.

For the first time in the literature, we also tried to analyze in a more systematic fashion the cycles of convergence and divergence. So, our results on the level of the world economy are to be interpreted as a resounding 'yes' for the hypotheses voiced by Kondratieff, but with several additional qualifications and extensions. Kondratieff was right in analyzing a 54-year cycle of the real economy as well, but there are other important cycles too; some of them very well known to social science researchers, others, perhaps, still more to be explored. On the level of industrial production growth in the world economy,
there is – parallel to the Kondratieff cycle – a 140-year ‘logistic’ cycle, first analyzed by Immanuel Wallerstein; and in addition, there is the newly discovered 36-year disaster cycle, correctly predicted by the neoclassical contemporary economist Robert Barro. For sure, there is also evidence – although somewhat weaker than expected – for a 22–23-year Kuznets cycle and the shorter, well-known Juglar cycles and Kitchin cycles. We achieved our results with the untransformed data at our disposal, but also with 5-year moving average transformations of the original data, which wielded the same results. There is strong reason to believe that the Wallerstein cycle is closely connected to the issue of leadership in the international system. The main results of our analysis of the Maddison data set indicate that Kondratieff cycles of around 60 years duration are most clearly visible in Argentina, Canada, and Russia. We also found evidence on the existence of longer cycles of more than 35 years in Belgium, Chile, Greece, Netherlands, India, New Zealand, Spain, and USA; while for the other countries of the Maddison data set, the spectral density analysis results reported in Diebolt and Doliger (2006) could not be falsified.

In this essay, we also tested the crucial relationship of the Akamatsu cycles of convergence and the cross correlation relationship between the Akamatsu cycle and the Kondratieff cycle. Our research also sheds lights on the necessary reformulation of Kondratieff cycle dating schemes and the assessment of the current crisis, which began in 2007. There is good reason to believe that the current crisis is NOT a Kondratieff cycle low (which hit the world economy in the late 1980s, culminating in the disintegration of Communist rule in Eastern Europe and the end of the Soviet Union), but the beginning of a downswing phase of the 140-year Wallerstein cycle.

## References

**Akamatsu K. 1961.** A Theory of Unbalanced Growth in the World Economy. *Weltwirtschaftliches Archiv – Review of World Economics* 86(2): 196–217.

**Arrighi G. 1995.** *The Long 20th Century. Money, Power, and the Origins of Our Times*. London – New York: Verso.

**Arrighi G., Silver B. J., and Brewer B. D. 2003.** Industrial Convergence, Globalization, and the Persistence of the North-South Divide. *Studies in Comparative International Development* 38(1): 3–31.

**Barro R. J., and Ursúa J. F. 2008.** Macroeconomic Crises since 1870. *Brookings Papers on Economic Activity* 2008(1): 255–350.

**Barro R. J., Nakamura E., Steinsson J., and Ursúa J. F. 2013.** Crises and Recoveries in an Empirical Model of Consumption Disasters. *American Economic Journal: Macroeconomics* 5(3): 35–74.

**Bartlett M. S. 1946.** On the Theoretical Specification of Sampling Properties of Auto-correlated Time Series. *Journal of Royal Statistical Society, Series B*, 8: 27–41.
Blalock H. M. 1972. *Social Statistics*. New York: McGraw-Hill.

Bloomfield P. 1976. *Fourier Analysis of Time Series*. New York: John Wiley and Sons.

Bolt J., and van Zanden J. L. 2013. *The First Update of the Maddison Project: Re-Estimating Growth Before 1820*. Maddison Project Working Paper 4. URL: http://www.ggdc.net/maddison/maddison-project/home.htm

Box G. E. P., and G. M. Jenkins G. M. 1976. *Time Series Analysis: Forecasting and Control*. Rev. ed. San Francisco: Holden-Day.

Cook R. D. 1977. Detection of Influential Observations in Linear Regression. *Techno-metric* 19: 15-18.

Cryer J. D. 1986. *Time Series Analysis*. Boston, MA: Duxbury Press.

Dempster A. P. 1969. *Elements of Continuous Multivariate Analysis*. Reading, MA: Addison-Wesley.

Devezas T. C. (Ed.) 2006. *Kondratieff Waves, Warfare and World Security*. Proceedings of the NATO Advanced Research Workshop on the Influence of Chance Events and Socioeconomic Long Waves in the New Arena of Asymmetric Warfare, Covilhã, Portugal, 14-18 February 2005. Amsterdam: IOS Press.

Devezas T. C. 2010. Crises, Depressions, and Expansions: Global Analysis and Secular Trends. *Technological Forecasting and Social Change* 77(5): 739-761.

Devezas T. C. 2012. The Recent Crisis under the Light of the Long Wave Theory. *Kondratieff Waves. Dimensions and Prospects at the Dawn of the 21st Century* / Ed. by L. E. Grinin, T. C. Devezas, and A. V. Korotayev, pp. 138-175. Volgograd: Uchitel.

Devezas T. C., and Corredine J. T. 2001. The Biological Determinants of Long-wave Behavior in Socioeconomic Growth and Development. *Technological Forecasting and Social Change* 68(1): 1-57.

Diebold F. X., Kilian L., and Nerlove M. 2013. Time Series Analysis. *The New Palgrave Dictionary of Economics* / Ed. by S. N. Durlauf, and L. E. Blume. 2nd ed. Basingstoke: Palgrave Macmillan. URL: http://www.dictionaryofeconomics.com/article?id=pde2008_T000064. doi:10.1057/9780230226203.1707

Diebolt C. 2012. Cliometrics of Economic Cycles in France. *Kondratieff Waves. Dimensions and Prospects at the Dawn of the 21st Century* / Ed. by L. E. Grinin, T. C. Devezas, and A. V. Korotayev, pp. 120-137. Volgograd: Uchitel.

Diebolt C., and Doliger C. 2006. Economic Cycles under Test: A Spectral Analysis. *Kondratieff Waves, Warfare and World Security*. Proceedings of the NATO Advanced Research Workshop on the Influence of Chance Events and Socioeconomic Long Waves in the New Arena of Asymmetric Warfare, Covilhã, Portugal, 14-18 February 2005 / Ed. by T. C. Devezas, pp. 39-47. Amsterdam: IOS Press.

Diebolt C., and Escudier J. L. 2002. *Croissance économique dans le long terme*. Paris: L'Harmattan.

Dziuban C. D., and Shirkey E. C. 1974. When is a Correlation Matrix Appropriate for Factor Analysis? *Psychological Bulletin* 81: 358-361.
**Fuller W. A. 1976. Introduction to Statistical Time Series.** New York: John Wiley and Sons.

**Goldstein J. S. 1988. Long Cycles: Prosperity and War in the Modern Age.** New Haven, CT: Yale University Press.

**Hanahan D., and Weinberg R. A. 2000.** The Hallmarks of Cancer. *Cell* 100(1): 57–70.

**Hanahan D., and Weinberg R. A. 2011.** Hallmarks of Cancer: The Next Generation. *Cell* 144(5): 646–674.

**Harman H. H. 1976. Modern Factor Analysis.** 3rd ed. Chicago: University of Chicago Press.

**Kondratieff N. D. 1925.** The Static and the Dynamic View of Economics. *Quarterly Journal of Economics* 39(4): 575–583.

**Kondratieff N. D. 1926.** Die langen Wellen der Konjunktur. *Archiv fuer Sozialwissenschaft und Sozialpolitik* 56(3): 573–609.

**Kondratieff N. D. 1928.** Die Preisdynamik der industriellen und landwirtschaftlichen Waren. Zum Problem der relativen Dynamik der Konjunktur. *Archiv fuer Sozialwissenschaften und Sozialpolitik* 60(1): 1–85.

**Kondratieff N. D. 1935.** The Long Waves in Economic Life. *Review of Economic Statistics* 17(6): 105–115.

**Korotayev A. V., and Grinin L. E. 2012.** Kondratieff Waves in the World System Perspective. *Kondratieff Waves. Dimensions and Prospects at the Dawn of the 21st Century* / Ed. by L. E. Grinin, T. C. Devezas, and A. V. Korotayev, pp. 23–65. Volgograd: Uchitel.

**Korotayev A. V., and Tsirel S. V. 2010.** A Spectral Analysis of World GDP Dynamics: Kondratieff Waves, Kuznets Swings, Juglar and Kitchin Cycles in Global Economic Development, and the 2008–2009 Economic Crisis. *Structure and Dynamics* 4(1). URL: http://www.escholarship.org/uc/item/9jv108xp

**Kuznets S. 1940.** Schumpeter's Business Cycles. *American Economic Review* 30(2): 157–169.

**Kuznets S. 1976. Modern Economic Growth: Rate, Structure and Spread.** New Haven, CT: Yale University Press.

**Maddison A. 2003.** *The World Economy: Historical Statistics*. Paris: Development Centre of the Organisation for Economic Co-operation and Development.

**Maddison A. 2007.** *Contours of the World Economy, 1–2030 AD: Essays in Macroeconomic History*. Oxford – New York: Oxford University Press.

**Perman R., and Tavera C. 2005.** A Cross-country Analysis of the Okun's Law Coefficient Convergence in Europe. *Applied Economics* 37(21): 2501–2513.

**Quenouville M. H. 1949.** Approximate Tests of Correlation in Time Series. *Journal of the Royal Statistical Society, Series B*, 11: 68–68.
**Rasler K., and Thompson W. R. 2009.** Globalization and North-South Inequality, 1870–2000: A Factor for Convergence, Divergence or Both? *International Journal of Comparative Sociology* 50(5–6): 425–451.

**Reuveny R., and Thompson W. R. 2008.** Uneven Economic Growth and the World Economy's North-South Stratification. *International Studies Quarterly* 52: 579–605.

**Rummel R. J. 1970. Applied Factor Analysis.** Evanston, IL: Northwestern University Press.

**Smith R. J., and Taylor A. M. R. 2001.** Recursive and Rolling Regression-based Tests of the Seasonal unit Root Hypothesis. *Journal of Econometrics* 105(2): 309–336.

**Tang C. F. 2010.** The Money-prices Nexus for Malaysia: New Empirical Evidence from the Time-varying Cointegration and Causality Tests. *Global Economic Review* 39(4): 383–403.

**Tausch A., and Ghymers Ch. 2007.** *From the 'Washington' towards a 'Vienna Consensus'? A Quantitative Analysis on Globalization, Development and Global Governance.* Hauppauge, NY: Nova Science Publishers.

**Velleman P. F., and Welsch R. E. 1981.** Efficient Computing of Regression Diagnostics. *American Statistician* 35: 234–242.

**Vernon R. 1966.** International Investment and International Trade in the Product Cycle. *Quarterly Journal of Economics* 80(2): 190–207.

**Zivot E., and Wang J. 2006.** *Modeling Financial Time Series with S-PLUS, Second Edition, with Jiahui Wang.* Heidelberg, Berlin – New York: Springer.
## Appendix 1. Data for World System Cycles: Industrial Production, War, Defense Pacts

One can find sources and updates for world level data (1495–2013) at http://www.hichemkaroui.com/?p=2383; for the period after 1998 at http://www.ereport.ru/en/stat.php?razdel=country&count=world&table=ipecia &time=2.

<table><caption>**Table.** Industrial production growth rate, % (based on U.S. CIA World Factbook)</caption><thead><tr><td>Year</td><td>Value</td></tr></thead><tbody><tr><td>1998</td><td>0.5</td></tr><tr><td>1999</td><td>3.2</td></tr><tr><td>2000</td><td>6.8</td></tr><tr><td>2001</td><td>0.2</td></tr><tr><td>2002</td><td>1.9</td></tr><tr><td>2003</td><td>4.1</td></tr><tr><td>2004</td><td>5.1</td></tr><tr><td>2005</td><td>6.0</td></tr><tr><td>2006</td><td>6.0</td></tr><tr><td>2007</td><td>5.0</td></tr><tr><td>2008</td><td>3.2</td></tr><tr><td>2009</td><td>-2.7</td></tr><tr><td>2010</td><td>4.6</td></tr><tr><td>2011</td><td>4.5</td></tr></tbody></table>

## Appendix 2. Data for the War Cycle 1495 – Today

The great question, already raised by Joshua Goldstein, is whether wars correspond as well to such a pattern. Allowing for changes in global battle technology, which greatly increased military and non-military battle fatalities, we performed a transformation of the original data, based on the 10th root of annual battle fatalities from major power wars. The 130 to 160 years cycle of major power wars seems to be confirmed again, with shorter cycles in between.

For the war data since 1495 see Goldstein (1988) for the period until 1975; and PRIO Oslo (http://www.prio.no/page/CSCW_research_detail/Programme_detail_CSCW/9649/45656.htm) for the period after 1975. See also http://www.hichemkaroui.com/?p=2383.
## Appendix 3. Replicating Korotayev and Tsirel's World System Analysis of Global Industrial Production Growth

Korotayev and associates recently used a 5-year moving averages procedure. On a world level, we get the following graph of world industrial production growth (DYN WIPG):

<figure><img src="image_44.png" /><figcaption>Periodogram von VAR00001 nach Periode</figcaption></figure>

<figure><img src="image_45.png" /></figure>

Periodogram for the entire
period
Periodogramm von VAR00001 nach Periode

<figure><img src="image_46.png" /></figure>

Periodogram for
0-80 years

Spektraldichte von VAR00001 nach Periode

<figure><img src="image_47.png" /></figure>

Spectral density graph for
the entire period

Fenster: Tukey-Hamming (3)
Spektraldichte von VAR00001 nach Periode

<figure><img src="image_48.png" /></figure>

Fenster: Tukey-Hamming (3)

VAR00001

<figure><img src="image_49.png" /></figure>

Autocorrelation analysis, with
the relevant significant peaks
again showing the existence
of the K-cycles and the Wal-
lerstein cycles
<figure><img src="image_50.png" /><figcaption>**Appendix 4. The Akamatsu Cycles Compared: Country GDP Per Capita in Real Purchasing Power Parity as a Percentage of the Global Average for 31 Countries in the World System since 1880**</figcaption></figure>

<figure><img src="image_51.png" /></figure>
Austria

<figure><img src="image_52.png" /></figure>

Belgium

<figure><img src="image_53.png" /></figure>
Brazil

<figure><img src="image_54.png" /></figure>

Canada

<figure><img src="image_55.png" /></figure>
<figure><img src="image_56.png" /><figcaption>Colombia</figcaption></figure>

<figure><img src="image_57.png" /></figure>
Denmark

<figure><img src="image_58.png" /></figure>

UK

<figure><img src="image_59.png" /></figure>
<figure><img src="image_60.png" /><figcaption>Finland</figcaption></figure>

<figure><img src="image_61.png" /></figure>
<figure><img src="image_62.png" /><figcaption>Germany</figcaption></figure>

<figure><img src="image_63.png" /></figure>
<figure><img src="image_64.png" /><figcaption>Netherlands</figcaption></figure>

<figure><img src="image_65.png" /></figure>
India

<figure><img src="image_66.png" /></figure>

Indonesia

<figure><img src="image_67.png" /></figure>
<figure><img src="image_68.png" /><figcaption>Japan</figcaption></figure>

<figure><img src="image_69.png" /></figure>
<figure><img src="image_70.png" /><figcaption>Norway</figcaption></figure>

<figure><img src="image_71.png" /></figure>
<figure><img src="image_72.png" /><figcaption>Portugal</figcaption></figure>

<figure><img src="image_73.png" /></figure>
<figure><img src="image_74.png" /><figcaption>Sri Lanka</figcaption></figure>

<figure><img src="image_75.png" /></figure>
<figure><img src="image_76.png" /><figcaption>Switzerland</figcaption></figure>

<figure><img src="image_77.png" /></figure>
<figure><img src="image_78.png" /><figcaption>USA</figcaption></figure>

<figure><img src="image_79.png" /></figure>
<figure><img src="image_80.png" /></figure>

## Appendix 5. Rolling Regressions – 25-Year Rolling Regression Slopes

Akamatsu cycle (cycle of income convergence with the capitalist center, the USA; left hand scale); Kondratieff cycles (right hand scale).

<figure><img src="image_81.png" /></figure>
<figure><img src="image_82.png" /></figure>

<figure><img src="image_83.png" /></figure>

<figure><img src="image_84.png" /></figure>
<figure><img src="image_85.png" /></figure>

<figure><img src="image_86.png" /></figure>

<figure><img src="image_87.png" /></figure>
<figure><img src="image_88.png" /></figure>

<figure><img src="image_89.png" /></figure>

<figure><img src="image_90.png" /></figure>
<figure><img src="image_91.png" /></figure>

<figure><img src="image_92.png" /></figure>

<figure><img src="image_93.png" /></figure>
<figure><img src="image_94.png" /></figure>

<figure><img src="image_95.png" /></figure>

<figure><img src="image_96.png" /></figure>
<figure><img src="image_97.png" /></figure>

<figure><img src="image_98.png" /></figure>

<figure><img src="image_99.png" /></figure>
<figure><img src="image_100.png" /></figure>

<figure><img src="image_101.png" /></figure>

<figure><img src="image_102.png" /></figure>
<figure><img src="image_103.png" /></figure>

<figure><img src="image_104.png" /></figure>

<figure><img src="image_105.png" /></figure>
<figure><img src="image_106.png" /></figure>

<figure><img src="image_107.png" /></figure>

<figure><img src="image_108.png" /></figure>
<figure><img src="image_109.png" /></figure>

<figure><img src="image_110.png" /></figure>
<figure><img src="image_111.png" /><figcaption># Appendix 6. Linear Time-Series Convergence Regression Slopes of the Countries of the World System in Comparison with the GDP Per Capita of the United Kingdom</figcaption></figure>

<figure><img src="image_112.png" /></figure>
Austria

<figure><img src="image_113.png" /></figure>

Belgium

<figure><img src="image_114.png" /></figure>
Brazil

<figure><img src="image_115.png" /></figure>

Canada

<figure><img src="image_116.png" /></figure>
<figure><img src="image_117.png" /><figcaption>Colombia</figcaption></figure>

<figure><img src="image_118.png" /></figure>
Denmark

<figure><img src="image_119.png" /></figure>

F. USSR/Russia

<figure><img src="image_120.png" /></figure>
Finland

<figure><img src="image_121.png" /></figure>

France

<figure><img src="image_122.png" /></figure>
Germany

<figure><img src="image_123.png" /></figure>

Greece

<figure><img src="image_124.png" /></figure>
Holland/Netherlands

<figure><img src="image_125.png" /></figure>

India

<figure><img src="image_126.png" /></figure>
Indonesia (Java before 1880)

<figure><img src="image_127.png" /></figure>

Italy

<figure><img src="image_128.png" /></figure>
New Zealand

<figure><img src="image_129.png" /></figure>

Norway

<figure><img src="image_130.png" /></figure>
Peru

<figure><img src="image_131.png" /></figure>

Portugal

<figure><img src="image_132.png" /></figure>
Spain

<figure><img src="image_133.png" /></figure>

Sri Lanka

<figure><img src="image_134.png" /></figure>
Sweden

<figure><img src="image_135.png" /></figure>

Switzerland

<figure><img src="image_136.png" /></figure>
Uruguay

<figure><img src="image_137.png" /></figure>

USA

<figure><img src="image_138.png" /></figure>
Venezuela

<figure><img src="image_139.png" /></figure>
# 6
## Long Waves in American Politics.
### Part One: Takeoff Presidencies

Brian J. L. Berry and Denis J. Dean

**Abstract**

Relationships between long waves and cyclicalities in American politics are explored. Particular attention is paid to ‘takeoff presidencies’, as modeled by Edward Jayne. These presidencies occurred in the decade following a long-wave trough and brought with them visions of liberty that have negated the preceding vision. The question is raised as to whether the Obama presidency, occurring in the same long wave phase as previous takeoff presidencies will bring yet another redefinition of liberty to America.

**Keywords:** Kondratieff, cycles, takeoff presidencies, Jayne, longwave clock, federalism, transcendentalism, progressivism, alienationism, Obama.

**Introduction**

The reelection of Barack Obama to the U.S. presidency in 2012 was hailed by his supporters as signaling ‘the irreversible triumph of a new, 21st century America: multiracial, multi-ethnic, global outlook and moving beyond centuries of racial, sexual, marital and religious tradition’ (Fineman 2012), heralding movement toward a European-style green welfare state secured by both legislative and executive action. Coming at the end of a deflationary depression marked by intense social turmoil and political polarization, Obama's election is not the first to have involved the reshaping of the social contract at the beginning of the takeoff phase of a Kondratieff wave, however. Edward Jayne (2005) hypothesizes that American culture has been marked by four earlier takeoff stages in which authors and intellectuals moved quickly from nonspecific dissatisfaction with declining growth to shared righteousness against established orthodoxy, radical politics and to the sense that the social contract deserves to be revised.

The primary purpose of this paper is to provide more information about these four takeoff stages, to place them in their proper location on the long wave, and to propose the closer look at the Obama case that will be addressed in Part Two of the discussion, a separate paper. Other radical shifts in America's politics occurred in different long wave phases and are better documented

Kondratieff Waves: Juglar - Kuznets - Kondratieff 2014 251-264
(Berry, Harpham, and Elliott 1995, 1998). For example, exemplifying left-right
shifts precipitated by stagflation crises, Ronald Reagan was elected in 1980 on
a platform that rejected the premises of the New Deal and Great Society and
that called for a return from statism to an individualistic, innovative, risk-taking
model of governance, restricting the growth of government via tax reductions
and deregulation. In earlier long waves the same phase was occupied by fiscal
conservative James Monroe, Ulysses Grant and Calvin Coolidge.

Leftward shifts after deflationary depressions and rightward shifts after
stagflation crises are among the alternations between public purpose (the desire to
better society) and private interest (the desire to better oneself), described by
Arthur M. Schlesinger, Jr. (1986) as fundamental to American two-party politics,
although Schlesinger did not place them in their long wave location. Public
action, Schlesinger said, is impelled by the vision of America as a nation of
destiny and piles up a lot of change in short order. But sustained public action
frequently produces less than is promised. Disillusion and an era of individualism
follow. But in such an era not everyone succeeds. Some segments of the
population fall behind in the acquisition race. People weary of materialism begin
to look beyond themselves. Each public/private cycle, Schlesinger believed, lasts
a generation. ‘Each swing of the cycle produced Presidents responsive to the
national mood, some against their own inclination’, he wrote (Ibid.: 32).

Generational timing has been confirmed by later cyclical analyses (Mer-
rill III, Grofman and Brunell 2008), with a suggestion that there are accompa-
nying changes in social values, progressive stages followed by stages that are
cosmopolitan and conservative stages by the parochial (Namenwirth 1973),
with each accompanied by a particular type of presidency. Takeoff stage presi-
dencies are progressive, and the first step is to properly locate them on the long
wave clock.

The Long-Wave Clock

The long wave clock runs and average of 55.8 ≈ 56 years from trough to
trough, repeating the cycle of deflation, reflation, inflation, disinflation and
deflation shown in Fig. 1. Mode-locked within each long wave are three 18.6-
year Kuznets investment cycles and six 9.3-year business cycles, as shown in
Fig. 2.
<figure><img src="image_140.png" /><figcaption>**Fig. 1.** Timing of long-wave peaks, troughs and inflation waves in the last two centuries</figcaption></figure>
<figure><img src="image_141.png" /><figcaption>**Fig. 2.** Fourteen presidential terms occupy each long-wave</figcaption></figure>

**Upwave and Downwave Presidencies**

What has been overlooked in the previous literature, and which provides a key to what follows, is that each long wave also encompasses 14 4-year American presidential terms. These also appear in Fig. 2. There are seven ‘upwave’ presidential terms, numbered 1 to 7 in Fig. 2 and detailed in Table 1. Seven ‘downwave’ presidential terms are numbered 8 to 14 and are documented in Table 2.
<table><caption>**Table 1.** Upwave Presidencies</caption><thead><tr><th>Deflationary Depression</th><th>Inflationary Spiral</th></tr></thead><tbody><tr><td>1. Continental Congress, 1785–1789</td><td>2. George Washington, 1789–1793</td><td>3. George Washington, 1793–1797</td><td>4. John Adams, 1797–1801</td><td>5. Thomas Jefferson, 1801–1805</td><td>6. Thomas Jefferson, 1805–1809</td><td>7. James Madison, 1809–1813</td></tr><tr><td>1. William Henry Harrison / John Tyler, 1841–1845</td><td>2. James Knox Polk, 1845–1849</td><td>3. Zachary Taylor / Millard Fillmore, 1849–1853</td><td>4. Franklin Pierce, 1853–1857</td><td>5. James Buchanan, 1857–1861</td><td>6. Abraham Lincoln, 1861–1865</td><td>7. Andrew Johnson, 1865–1869</td></tr><tr><td>1. William McKinley, 1897–1901</td><td>2. Theodore Roosevelt, 1901–1905</td><td>3. Theodore Roosevelt, 1905–1909</td><td>4. William Howard Taft, 1909–1913</td><td>5. Woodrow Wilson, 1913–1917</td><td>6. Woodrow Wilson, 1917–1921</td><td>7. Warren Gamaliel Harding / Calvin Coolidge, 1921–1925</td></tr><tr><td>1. Dwight David Eisenhower, 1953–1957</td><td>2. Dwight David Eisenhower, 1957–1961</td><td>3. John Fitzgerald Kennedy / Lyndon Baines Johnson, 1961–1965</td><td>4. Lyndon Baines Johnson, 1965–1969</td><td>5. Richard Milhous Nixon, 1969–1973</td><td>6. Richard Milhous Nixon / Gerald Rudolph Ford, 1973–1977</td><td>7. James Earl Carter, Jr., 1977–1981</td></tr><tr><td>1. Barack Hussein Obama, 2009–2013</td><td>2. Barack Hussein Obama, 2013–2016</td><td></td><td></td><td></td><td></td><td></td></tr></tbody></table>
<table><caption>**Table 2. Downwave Presidencies**</caption><thead><tr><th>Inflationary Spiral</th><th>Deflationary Depression</th></tr></thead><tbody><tr><td>8. James Madison, 1813–1817</td><td>9. James Monroe, 1817–1821</td><td>10. James Monroe, 1821–1825</td><td>11. John Quincy Adams, 1825–1829</td><td>12. Andrew Jackson, 1829–1833</td><td>13. Andrew Jackson, 1833–1837</td><td>14. Martin Van Buren, 1833–1841</td></tr><tr><td>8. Ulysses Simpson Grant, 1869–1873</td><td>9. Ulysses Simpson Grant, 1873–1877</td><td>10. Rutherford Birchard Hayes, 1877–1881</td><td>11. James Abram Garfield / Chester Alan Arthur, 1881–1885</td><td>12. Grover Cleveland, 1885–1889</td><td>13. Benjamin Harrison, 1889–1893</td><td>14. Grover Cleveland, 1893–1897</td></tr><tr><td>8. Calvin Coolidge, 1925–1929</td><td>9. Herbert Clark Hoover, 1929–1933</td><td>10. Franklin Delano Roosevelt, 1933–1937</td><td>11. Franklin Delano Roosevelt, 1937–1941</td><td>12. Franklin Delano Roosevelt, 1941–1945</td><td>13. Franklin Delano Roosevelt / Harry S. Truman, 1945–1949</td><td>14. Harry S. Truman, 1949–1953</td></tr><tr><td>8. Ronald Wilson Reagan, 1981–1985</td><td>9. Ronald Wilson Reagan, 1985–1989</td><td>10. George Herbert Walker Bush, 1989–1993</td><td>11. William Jefferson Clinton, 1993–1997</td><td>12. William Jefferson Clinton, 1997–2001</td><td>13. George Walker Bush, 2001–2005</td><td>14. George Walker Bush, 2005–2009</td></tr></tbody></table>

In previous work we speculated about the long wave rhythms embedded in American politics, especially on the downwave, but did not tie them explicitly to presidential terms (Berry, Kim and Baker 2001; Berry and Dean 2012). Inflationary spirals, we said, elicit a response that leads to the election of fiscal conservatives who struggle to bring inflation under control and to restart the economy. Monroe, Grant, Coolidge and Reagan all were presidents who presided over the ensuing techno-economic revolutions, the Era of Good Feelings 1816–1825, the Gilded Age 1865–1884, the Roaring Twenties 1921–1929, and the IT Revolution 1981–1990 (Berry, Kim and Kim 1993). But rapid technological change produces new winners and casts aside old losers. Inequality increases – urban-rural after 1815, North-South after 1865, metropolitan-nonmetropolitan after 1921, high-tech/low-tech after 1981 (Berry, Harpham,
and Elliot 1998 103–104), resulting in reformist reactions (Jacksonian Democ-
racy that created the distributive state, Cleveland's Early Reform that intro-
duced regulatory state, Roosevelt's New Deal that established the redistributive
state and the more recent Clinton reforms). Such reforms are overwhelmed as
disinflation turns to deflation, however, and economic crises (the Panic of
1837, the Panic of 1893, the Crisis of 1950 and the market crash of 2007), are
followed by deep depressions with accompanying trough wars (the Mexican
war of 1846–1847, the Spanish-American War of 1897–1898, the Korean War
of 1950–1954...).

It is in the aftermath of war and deflationary depression that Jayne's model takes over, providing a key to understanding the early upwave dynamics exemplified by the presidencies of Washington, Polk, T. Roosevelt, Eisenhower, and, perhaps, Obama.

The Takeoff Stages: Jayne's Model

Jayne's model centers on what he terms ‘American Kondratieff takeoff stages’, each which achieved critical mass in the American culture in tight clusters of major publications. Four stages are described, termed the Federalist, Transcendental, Progressive and Alienationist, forming alternative pairs, the Federalist and Progressive where the presidency and dominant culture are aligned, and the Transcendental and Alienationist, where presidential actions that contributed to economic recovery diverged from a self-indulgent cultural frontier. We reproduce his argument, taking advantage of his invitation to make use of his materials so long as the use is not for material gain.

The Federalist Stage

The first takeoff stage, the Federalist was initiated by radical activism during the American Revolution, to which there was a conservative response focused on the attempt to create a strong central government to replace the British monarchy.

Critical mass was achieved in the three years that encompassed the publi-
cation of John Adams's *A Defense of Government of the United States* (1787),
the *American Constitution* and the *Proceeding of the Constitutional Convention*
(1787), *The Federalist Papers* and the 1789 *Bill of Rights and Judiciary Act*.
Tom Paine's *The Rights of Man* was published in 1791–1792 in England.

Implementation took the steady hand of founding father George Washing-
ton, and his refusal to be king of a new monarchy. Washington presided over
the drafting of the U.S. Constitution and oversaw the creation of a strong well-
financed national government. His vision was of a powerful nation built on
republican lines using federal power, but in which the citizens had certain inal-
ienable rights. The role of the government was seen as one preserving liberty,
improving infrastructure, opening western lands, founding a permanent capital
and promoting the spirit of nationalism. This view shaped the new state, but
also embodied compromises on the slavery question that festered until it be-
came the central national issue in the next long-wave.
## The Transcendental Stage

The second or Transcendental Stage introduced America, according to Jayne, a creed of radical individualism inspired by the early nineteenth century romantic idealism of Kant, Coleridge, and Carlyle, which spearheaded and gave theoretical respectability to the public reaction against the eighteenth century Enlightenment led by such figures as Voltaire, Rousseau, Montesquieu, and Hume. In the United States this reaction both justified and necessitated a major departure from the Federalist perspective, since it featured heightened consciousness presumably superior to the relatively narrow rights and obligations established by the federal government. By most accounts, the Federalists' worst transgression was that they had created the United States based on a compromise at the Constitutional Convention that permitted slavery. This was rejected by the Transcendentalists, for whom liberty consisted of intellectual freedom devoid of such compromises, not merely the freedom to do as one pleases as guaranteed by law.

Critical mass was achieved in six peak years encompassed by Emerson's *Representative Men* (1850), Hawthorne's *The Scarlet Letter* (1850), *The House of Seven Gables* (1851), and *The Blithedale Romance* (1852), Melville's *Mardi* (1849), *Redburn* (1849), *White Jacket* (1850), *Moby Dick* (1851), *Pierre* (1852), and *Benito Cereno* (1855), Thoreau's *Week on the Concord and Merrimack* (1849), *Civil Disobedience* (1849), and *Walden* (1854), Whitman's *Leaves of Grass* (1855), Stowe's *Uncle Tom's Cabin* (1852), and Parkman's *Oregon Trail* (1849), and *Conspiracy of Pontiac* (1851) as the antislavery movement increased in strength and North-South conflict increased over whether new lands should be slaveholding or free.

The takeoff presidency was that of James Polk, whose fundamental belief in Manifest Destiny led, through both war and negotiation, to the creation of a coast-to-coast nation where yeoman farmers could go West and settle new lands. He also reformed the civil service, reestablished an independent Treasury System, and expanded the power of the presidency, especially with the respect to making war. But he was also a slaveholder, which led to increasing abolitionist criticism, but he only served one term and it was during his successors' presidencies that the North-South conflict escalated into the Civil War.

## The Progressive Stage

The third or Progressive Stage, according to Jayne, reached its height in the culture with London's *The Sea Wolf* (1904) and *The War of the Classes* (1905), Steffen's *The Shame of Cities* (1904), De Leon's *Socialist Reconstruction of Society* (1905), Santayana's *Life of Reason* (1905), William James's *Pragmatism* (1907), *A Pluralistic Universe* (1909), *The Meaning of Truth* (1909), *Some Problems of Philosophy* (1911), and *Essays in Radical Empiricism* (1912), Dewey's *How We Think* (1909), Adam's *Education of Henry Adams* (1907), Bierce's *The Devil's Dictionary* (1911), Mencken's *The Philosophy of Friedrich Nietzsche* (1908), Twain's *The Mysterious Stranger* (ms completed in 1908),
Sinclair's *The Jungle* (1906), Dreiser's *Sister Carrie* (reissued in 1907), and *Jenny Gerhardt* (1911), Stein's *Three Lives* (1909), Wharton's *Ethan Frome* (1911), Pound's *Personae* (1909), and T. S. Eliot's *The Love Song of J. Alfred Prufrock* (written between 1910 and 1911).

The scope embraced aestheticism, muckraking, radicalism and institutional reform. The gold standard, women's suffrage, the graduated tax income, anti-trust legislation, minimum wage laws, the eight-hour working day, child labor laws, farm loans, government corruption, and the popular election of senators were only a few of the social and political issues that consumed public attention. Radical politics came to the fore, promoted by such figures as De Leon, Debs, and Haywood, respectively of the Socialist Labor Party, Socialist Party, and the IWW, and in a sequence that accelerated over a decade from theory to anarchist labor practices. From the beginning of the pragmatism of James, Pierce, Dewey, and Santayana emphasized what seemed to be an intellectual freedom that could readily be invoked to challenge bourgeois assumptions. Novelists such as Dreiser, Lewis, Anderson, Dos Passos, Fitzgerald, Wolfe, and Faulkner told the stories of characters whose willingness to challenge these assumptions brought them into trouble with society at large, while poets such as Pound, Eliot, Stevens, Williams, Moore, and E. E. Cummings combined willingness with the use of avant-garde poetic technique to violate bourgeois aesthetic expectations.

Epitomizing the stage was Theodore Roosevelt. The classical progressive, he initiated civil service reform. An 'advocate' of universal expansion, he revised the Monroe Doctrine to allow the USA to 'exercise its international policy power'. At home, his 'Square Deal' programs included trust busting and regulation of business, plus a commitment to environmental conservation. Like Washington but unlike Polk, he epitomized the ethos of his times.

## The Alienationist Stage

The fourth and most recent take off stage Jayne characterizes as 'alienationist', expressed in the years encompassed by Nabokov's *Lolita* (1958), and *Pale Fire* (1962), Bellow's *Henderson the Rain King* (1959), and *Herzog* (1964), Mailer's *Advertisements for Myself* (1959) and *The Presidential Papers of Norman Mailer* (1963), Updike's *The Poorhouse Fair* (1959), *Rabbit Run* (1960), and *The Centaur* (1963), O'Connor's *The Violent Bear It Away* (1960), and *Everything that Rises Must Converge* (1964), Vonnegut's *The Sirens of Titan* (1959), *Mother Night* (1961), and Cat's Cradle (1963), Barth's *The End of the Road* (1958), and *The Sot-Weed Factor* (1960), Roth's *Goodbye Columbus* (1959) and *Letting Go* (1962), Baldwin's *Nobody Knows My Name* (1961), *Another Country* (1962), and *The Fire Next Time* (1963), Burroughs's *Naked Lunch* (1959), Heller's *Catch-22* (1961), Kesey's *One Flew Over the Cuckoo's Nest* (1962), Pynchon's *V* (1963), and Selby's *Last Exit to Brooklyn* (1964).

Alienationists first asserted themselves during the fifties and early sixties as existential outsiders isolated from society, later as radical activists vehement-
ly opposed to the misuse of power by the federal government. Intellectuals
stirred public opinion with a fresh willingness to challenge received values.
Fiction was dominated by entirely new voices explicitly or implicitly in
the first-person singular. Investigative reporting became popular, as well as the
‘New Journalism’. Poetry was hyper-personalized by the confessional, Black
Mountain, San Francisco, New York, and deep image schools, while poets who
had already established their reputations simply reinvented themselves, as did
major novelists. Drugs became popular, and rock music was invented as well as
psychedelic art and light shows. The sense of alienation brought freedom to the
edge of social irresponsibility and sometimes over it. Meanwhile, a radical per-
spective was mounting that obliged political activism in response to the issues
of Vietnam and militant black nationalism. As controversy escalated, individual
expression was displaced by social protest too divisive to provide a safe vehicle
for permanent literary insight: literary and intellectual productivity almost en-
tirely came to a halt between 1964 and 1969 unless it stretched its connection
with overt political activism.

As in the second takeoff stage, when Polk succeeded in creating a coast-to-
coast nation while out of sympathy of the transcendentalism of his time, non-
alienationist Dwight D. Eisenhower introduced initiatives that transformed
the nation. Internationally, he led the U.S. battle against communist expansion,
engaged in overseas interventions, and promoted nuclear deterrence. At home,
he initiated a variety of programs that fundamentally changed the nation: the
Interstate Highway System, the Defense Advanced Research Projects Agency
(DARPA) which created the internet, NASA which began the space program,
NDEA which began federal involvement in education, and the Atomic Energy
Act which promoted the peaceful use of atomic power. He also oversaw the
Civil Rights Acts of 1957 and 1960 that protected the right to vote, desegregat-
ed the armed forces, and used Federal Troops to enforce desegregation of pub-
lic schools.

Important Alternations

The common denominator of these takeoff periods, Jayne argues, was a com-
mitment to liberty. In the culture at large the objective dedication to political
rights emphasized by the Federalists was supported by a subjective commit-
ment to Transcendental morality, then by the Progressive effort to reform social
and cultural institutions, and finally by a new level of subjectively principled
rebellion through what seemed a rejection of all social constraints. In other
words, the guarantee of political liberties demanded by the Federalists was fol-
lowed a half century later by the Transcendentalist pursuit of spiritual libera-
tion, then half a century later by the Progressive pursuit of social, political, and
economic reform, and finally, after yet another half century, by Alienationists'
willingness to challenge the orthodox respectability dominant in American so-
ciety after World War II.
The alternations are important. Whereas both the Federalist and Progressive takeoff stages featured the pursuit of attainable social and political modifications, the Alienationist and Transcendentalist takeoff stages put more emphasis upon the pursuit of individual freedom among those able and willing to confront authority. Jayne sees that two-century dialectic as being foretold by Hegel in his *Introduction to the Philosophy of History*, where it was argued that the entire history of the Western civilization has rested upon a 'progress of the consciousness of freedom'. Reflecting the dialectic, the Washington and Roosevelt presidencies were attuned to the dominant cultural movements of their times, but those of Polk and Eisenhower were not.

The difference is one of belief *versus* myth. Each new takeoff stage brought to the fore a unique vision of liberty that negated the version preceding it by rejecting it as an *ignis fatuus*, a limited objective whose exclusive pursuit prevents the attainment of genuine liberty. The Federalist perspective was energized by the belief that maximum individual rights can be at least provisionally attained by a disinterested central government organized on a constitutional basis. The Transcendental perspective substituted the myth declared by Thoreau in his famous manifesto, *Civil Disobedience*, that genuine individual freedom must be imposed by individuals who are willing and able to oppose immoral government intervention. The Progressive perspective then substituted the belief that genuine freedom necessarily depends on institutional reform based on pragmatic need. And finally the Alienationist perspective settled upon, perhaps, the most extravagant myth: that since our freedoms are necessarily curtailed by government supportive of an immoral power structure, radical disobedience becomes a permanent obligation simply to prevent the excessive misuse of government authority.

## The Presidency and the Long-Wave Clock

Thus, Jayne argues that American intellectual history has been marked by takeoff transformations occurring a half-century apart at the beginning of an economic long wave, each of which has been dominated by the same dialectic pursuit of freedom. He acknowledges Marx's contention that the intellectual compulsion primarily was the product of motives linked to the economic base, adding that he believes that intellectual change is organized sequentially through the agency of the Kondratieff long wave. This long-wave structuring also characterizes American political history as set down in Fig. 3. As the figure shows, four defining types of presidencies – conservative, liberal, 'takeoff' and cosmopolitan – each occupy specific locations on the long-wave clock. Takeoff presidents are elected in presidential term 2, at the beginning of an upwave. Cosmopolitan presidents are elected in presidential term 6, as an upwave approaches its end. Conservatives are elected in presidential term 9, at the beginning of a downwave. Liberals are elected in presidential term 12, as the downwave sags towards the trough. What defines each presidential type is the types of long-wave crises that precede them. These are also located on the
clock in Fig. 3. Deflationary depression precedes takeoff (progressive) presi-
dencies. Cosmopolitans take over after a midpoint crisis. Stagflation crises lead
to the election of conservative presidents, and after a primary trough liberals
take over.

<figure><img src="image_142.png" /><figcaption>**Fig. 3.** The presidency and the long-wave clock</figcaption></figure>

**Obama Takeoff Presidency**

The essential feature of the takeoff stage is that it is the long wave stage in which progressive presidents redefine the nation, either in lockstep with or in tension with a new emergent cultural paradigm. Barack Obama was reelected, like other progressives, in presidential term 2, in the aftermath of a deflationary depression and at the dialectic stage in which the presidency should be in tune with an emergent new cultural paradigm. We therefore conclude by asking what evidence might support these expectations.

Obama was elected via aggressive cultural identity and lifestyle politics that captured the imaginations of the nation's growing demographic and social groups – the young, minorities, millennials, and women – creating an emergent
Democratic majority that many have thought will prevail over declining core
Republican constituencies – traditional nuclear families, evangelicals, etc.
Obama's majority leaders have been characterized as the ‘millennial gentry’
who epitomize a socially liberal, east and west coast big city, ethnically diverse
culture concerned with economic inequality, poverty, environmental threats and
the second amendment. Their vision is one of a European-style welfare state,
with national health guarantees ('Obamacare'), steep income taxation that rais-
es the tax rates for 'the rich', expanded redistribution on grounds of 'fairness',
and massive expansion of the regulatory powers of the federal government to
constrain financial markets and to counter imagined personal and environmen-
tal threats, all combined with massive deficit spending – a set of initiatives that
critics call 'watermelon' – green on the outside but with a red interior –
producing and maintaining a permanently depressed underprivileged class firm-
ly dependent upon welfare handed out by gentry progressives. Faced with the
inability of conventional monetary instruments to ease the economy out of de-
pression, Obama's central bank has turned to 'quantitative easing' – buying
financial assets from commercial banks and other private institutions with new-
ly created money in order to inject a pre-determined quantity of money into the
economy. This easing increases the excess reserves of the banks, and raises the
prices of the financial assets bought, which lowers their yield, but also intro-
duces the possibility of massive inflationary pressures, which in previous up-
waves have originated in the takeoff stages as the economy reflates and have
brought takeoff transitions to an end. Whether Obama is achieving his goals or
whether opposition to his policies is crafting an alternative fifth takeoff will be
the subject of a follow-on essay as the Republican majority takes over in the
aftermath of a devastating Obama defeat in the midterms elections of 2014.

References

**Berry B. J. L., and Dean D. J. 2012.** Long Wave Rhythms: A Pictorial Guide to 220 Years of U.S. History, with Forecasts. *Kondratieff Waves. Dimensions and Prospects at the Dawn of the 21st Century* / Ed. by L. E. Grinin, T. C. Devezas, and A. V. Korotayev, pp. 107–119. Volgograd: Uchitel.

**Berry B. J. L., Harpham E. J., and Elliott E. 1995.** Long Swings in American Inequality: The Kuznets Conjecture Revisited. *Papers in Regional Science* 74: 153–174.

**Berry B. J. L., Harpham E. J., and Elliott E. 1998.** *The Rhythms of American Politics*. Lanham, MD: University Press of America.

**Berry B. J. L., Kim H., and Baker, E. S. 2001.** Low-Frequency Wave of Inflation and Economic Growth, A Digital Spectral Analysis. *Technological Forecasting and Change* 68: 63–73.

**Berry B. J. L., Kim H., and Kim H.-M. 1993.** Are Long Waves Driven by Techno-Economic Transformation? Evidence for the U.S. and U.K. *Technological Forecasting and Social Change* 44: 111–135.
**Fineman H. 2012.** Barack Obama Reelection Signals Rise of New America. *Huffington Post*. June, 11. URL: http://www.huffingtonpost.com/2012/11/06/barack-obama-reelection_n_2085819.html

**Jayne E. 2005.** A Kondratieff Model of U.S. Cultural History. URL: http://www.mikejayne.com/kondratieff/A_Kondratieff_Model.pdf

**Merrill S. III, Grofman B., and Brunell T. L. 2008.** Cycles in American National Electoral Politics, 1854–2006: Statistical Evidence and Explanatory Model. *American Political Science Review* 102: 1–17.

**Namenwirth J. Z. 1973.** Wheels of Time and the Interdependence of Value Change in America. *Journal of Interdisciplinary History* 5: 649–683.

**Schlesinger A. M. Jr. 1986.** *The Cycles of American History*. Boston: Houghton Mifflin Co.
# 7
## Long Waves in American Politics.
### Part Two: The Obama Question

Euel Elliott and Brian J. L. Berry

**Abstract**

Barack Obama, committed to ideas of social justice, has attempted to transform the United States into a European-style welfare state via taxation, regulation and legislation, in particular the Affordable Care Act ('Obamacare'), a medical insurance system that de facto is nationalizing one-sixth of the nation's economy. But a slowing economy, mounting unemployment, and increasingly powerful central bureaucracy caught up in spying and other scandals and a disastrous launch of Obama care are producing a rising tide of resistance and a reaffirmation of individual rights guaranteed by the Constitution. If Obama prevails he will be hailed as another take-off president. If his initiatives are overwhelmed by opposition forces, the effect will restore and strengthen constitutional guarantees that are currently under attack.

**Keywords:** long waves, take-off presidents, Jayne, Obama, progressivism, millennials.

In the preceding essay in this volume Brian J. L. Berry and Denis J. Dean asked whether the election of Barack Obama in 2008 by a new multiracial, multi-ethnic coalition amidst a deflationary depression signaled the arrival of a fifth 'take-off' president, committed to revision of the social contract by creation of a European-style welfare state, withdrawn from world leadership and with significantly diminished military power. The progressive left had been waiting for this moment for several decades. The 'modern liberal' or progressive governance model that envisioned an increasingly active role for the federal government had its origins in the presidencies of Theodore Roosevelt and Woodrow Wilson, but it was only with the advent of the Great Depression in 1929 and the election of Franklin Roosevelt in 1932 that modern liberalism began to see its full expression with the massive expansion of the redistributive and regulatory state. The modern liberal-progressive agenda was further advanced under the presidency of Lyndon Johnson, who brought to fruition a vast expansion of the welfare state, introducing Medicare and Medicaid and the War on Poverty as his Great Society initiatives. Following Johnson, liberal failures produced an increasingly jaundiced view of government, however. The seemingly end-

Kondratieff Waves: Juglar - Kuznets - Kondratieff 2014 265-275
less and unwinnable Vietnam War, the social unrest in the cities, and the sense
that the United States had lost its way – all contributed, as did the low econom-
ic growth and rising inflation, that culminated in the 1979–1981 stagflation
crisis.

The reaction came in the election of Ronald Reagan in 1980 over a hapless
Jimmy Carter ushered an era of conservative dominance in which the parame-
ters of government action were reset. The private sector became the driving
force, and even the election of Democrat Bill Clinton in 1992 could not alter
that fact. Indeed, much of Clinton's success was his acceptance of the im-
portance of free markets.

The eight years of the George W. Bush administration, beset by the wars
that followed 9–11, left conservatives disillusioned and provided a new oppor-
tunity for the left. The election of Barack Obama brought a hard-edged leftism
to the Executive Office that had not been seen since the New Deal. Some point-
ed to the transformative intent, ‘Obama is aiming at achieving a new set of so-
cioeconomic rights, whether through law or through policy’ (Sunstein 2013).
Others were not so sanguine, ‘Thanks to the 44th President of the United States,
Barack Obama, America will now join Egypt, Persia, Rome, Greece, Nazi
Germany, Britain and the rest of the many countries that have risen to power
only to be reduced to ruins thanks to their ignorance with regard to its enemies
and the hubris to deny such ignorance exists’ (Baker and Peters 2013). ‘For
four years, President Obama counted on fellow Democrats to rally to his side in
a series of epic battles with Republicans over the direction of the country. But
now, deep into his sixth year in office, Mr. Obama finds himself frustrated by
members of his own party weary of his leadership and increasingly willing to
defy him’ (Baker and Peters 2013). We, therefore, ask again: Is the Obama
presidency a ‘take-off’ presidency as E. Jayne<fnref n="1" /> has defined it? Did the election
of Barack Obama in 2008 and his reelection by a comfortable margin in the
Electoral College in 2012 foretell the beginning of a new progressive era? Or is
his dramatic reversal in the elections of 2014 a better bellwether? The long-
wave timing points to a take-off. Such an era would involve an expansion of the
welfare state and a surge in the role of the federal government in many areas of
public policy, transforming a nation built on the principles of federalism into
one with a quasi-unitary form of government. But if Obama's initiatives are
ultimately rejected as inconsistent with the fundamental beliefs that underpin
American society, as appears to have occurred in 2014, we should ask ‘What is
the alternative?’ There is an increasing belief that the alternative does not reside
in a Republican party split ‘between conservatives who want to limit govern-
ment and extremists who oppose governing’ (Fournier 2013a). Rather, com-
mentators point to the emerging beliefs of the rising generation of ‘millenni-

<footnote n="1">¹ The essay by E. Jayne (1991) is available at http://www.edwardjayne.com</footnote>
als' – those born since the 1981–1982 stagflation crisis – and the prospect of a
Millennial Revolution (Fournier 2013b). Thus, in what follows we explore the
nature of Obama's progressive thrust, the countervailing forces that appear to be
overwhelming his quasi-socialist initiatives while simultaneously destroying
the Republican party opposition, and the nature of the Millennial alternative
that may come closer than Obama or the Republicans to a Jayne long-wave
transformation.

A New Social Democracy?

What is

at stake is the new, more ambitious, social-democratic brand of Ameri-
can liberalism... Precisely when the GOP was returning to a more con-
stitutionalist conservatism committed to reforming, restructuring and
reining in the welfare state... Obama offered a transformational liberal-
ism designed to expand the role of government, enlarge the welfare state
and create yet more new entitlements... The centerpiece of this vision is
Obamacare, the most sweeping social reform in the past half-century, af-
fecting one-sixth of the economy and directly touching the most vital ar-
ea of life of every citizen (Krauthammer 2013).

There certainly are good reasons to believe that Obama's initiatives presage
a new progressive era. Just a cursory examination of the electoral and demo-
graphic landscape would suggest this is the case. An attractive and eloquent
African American, Barack Obama, was elected and reelected President by com-
fortable majorities. The outcome of the 2012 election, in particular, left many
observers pondering the very real possibility that such a large percentage of
Americans has come to rely upon government assistance that a permanent wel-
fare state dependency has arrived. If that had been the case, the future of lim-
ited government and traditional constitutionalism would have been bleak. Once
a welfare state is established it is virtually impossible to trim, much less replace
or fundamentally reform. As the welfare state becomes a permanent fixture of
the political landscape it reshapes the terms of debate and slowly transforms the
political culture, which in turn creates even greater opportunities for the expan-
sion of government.

But the 2014 elections, in which the Democrats suffered a major defeat,
suggest that the USA has reached a political tipping point. The electorate that
elected Barack Obama in 2008 and reelected him in 2012 is a far different elec-
torate from that which elected and reelected Ronald Reagan in 1980 and 1984.
Non-minority voters were 85 percent of the electorate in 1980. By 2012, they
were only about 72 percent. Immigration, both legal and illegal, and higher
birth rates among Hispanics have changed the electoral landscape profoundly.
It is not inconceivable that unless the Republican Party begins attracting sub-
stantially greater support among Hispanics, it will be impossible for the party to
win elections. Although Republican policy stances on various social issues such as support for the traditional family and for religious values seem to appeal to Hispanics, the truth is that the Republican Party is viewed as unwelcoming by the Hispanics as well as other minorities. In the case of Hispanics, their voting preferences are driven primarily by economic concerns and ultimately the Democratic Party seems to be the natural home for this group, except when the economy is bad and they express their displeasure by staying home rather than voting, as occurred in 2014.

When one also recognizes that African-Americans are likely to remain overwhelmingly Democratic and that the slow unraveling of traditional American values provides endless opportunities for the Democrats to lock in the support of women as well as those who are part of the vast government clientele relying upon public assistance, combined with the support of the lesbian, gay, bisexual, and transgender vote, it is easy to conclude that the Democratic Party is extraordinarily well positioned to dominate American politics at the presidential level for the next several decades. Among women, who not that many decades ago voted Republican, majorities have inclined toward the Democrats in the last seven elections, and among young unmarried and professional women Republicans are typically viewed with anathema. A party that appeals to traditional notions of sexual morality and is viewed as the 'religious party' has little appeal to those whose lifestyle leads to sexual promiscuity, having children outside of marriage, and involvement in homosexual relationships. Particularly given the fact many of these women have fewer socioeconomic opportunities, they are an easy target for a Democratic party eager to expand their base by appealing to ever-expanding government initiatives and supporting either explicitly or implicitly what a few years ago would be far outside the mainstream cultural arrangements. A party that has been in existence for 180 years and has shown an endless capacity to reinvent itself has been extraordinarily successful in building its modern foundation upon social welfare, presenting itself as the guarantor of the maintenance and expansion of the progressive therapeutic state. Building on this new foundation its most probable candidate in the 2016 election is a woman, Hilary Clinton, who is likely if elected to further reinforce the Democratic Party's emergent dominance among the electorate.

## But Will Obama Be Transformative?

It is therefore surprising that the verdict on whether Barack Obama will pilot a 'take-off' to a new progressive era is unresolved. This is in spite of his comfortable reelection in 2012 in a campaign that appeared to confirm his aggressive left-progressive agenda by demonizing the Republican opposition. President Obama surely was not a candidate for reelection whose policy agenda was lacking. His second term agenda included the successful implementation of the Patient Pro-
tection and Affordable Care Act ('Obamacare'), a green climate change agenda, immigration reform, gun control, a withdrawal from international leadership, significant cutbacks in the armed forces, and a continuing assault on inequality. Yet many of the domestic initiatives are mired in controversy and may not be successfully implemented.

President Obama's greatest domestic achievement, 'Obamacare', has evolved in ways that do not bode well for Obama or progressivism. Earlier progressive achievements such as Social Security, Medicare, or Civil Rights laws, while initially opposed by many conservatives, were ultimately accepted. That has not been the case with Obamcare, where the opposition by the general public as measured in public opinion polls, the efforts of organized interests, or the continual efforts by Republicans in Congress to defund the Act, has increased amidst a disastrous launch in which computer websites did not work and promises proved to be hollow.

While a detailed analysis of the problem with ACA implementation is far
beyond the purpose of this essay, it is nonetheless worth discussing the broad
evolution of the rollout because it highlights broader issues of competence and
corruption that have afflicted other parts of the Obama agenda. A critical
component of the ACA requires individuals, through the so-called 'individual
mandate', to purchase insurance. This was to be done through insurance
exchanges operated either by the states or by the federal government. Fourteen
states ended up operating exchanges, most of them Democratic liberal states
where political leadership was enthusiastic about the implementation of health
care reform. The rest refused to set up their own exchanges, defaulting to
an arrangement whereby the federal government would operate the exchange.

On October 1, 2013, the health exchanges were to ‘go live’. Individuals
were to be able to go online, find a qualified insurance plan that suits them, and
purchase that plan with coverage to begin effective January 1, 2014. Alas, it
would be an understatement to say things did not go well. Technical issues with
the websites, both federal and state, produced massive failure resulting in only
a small number of individuals able to sign-up for insurance. The negative
publicity was disastrous and Obamcare became a laughingstock and the butt of
jokes on late night television.

Although many of the technical aspects of the website were later fixed, the
initial exposure by the public to the website, either through direct experience or
second hand, was calamitous from the standpoint of maintaining credibility.
But the website was not the only, or even most important, factor. By November
of 2013, it became clear that millions of citizens in the so-called individual
market were about to lose their insurance because the plans did not meet the
minimum coverage requirements set by the ACA. This, compiled with the as-
surances repeated on multiple occasions by Obama from 2009 to 2012 that ‘if
you like your plan you can keep it', was exposed as the words of someone bad-
ly misinformed (at best) or a liar (at worst).

More than any other federal government initiative in memory, the early
implementation of the ACA has served to remind Americans of the limited
competence of government, and indeed incompetence, in seeking to carry out
a complete transformation of one sixth of the U.S. economy. The cavalier atti-
tude of the President and his advisors toward Obama care implementation along
with willingness to use executive powers to attack opponents of the administra-
tion has resulted in mounting distrust: the Gallup Poll indicated that more than
20 percent of the American respondents believed that the federal government
was the greatest threat to their liberties. It may be one of the great ironies of
American politics that one of the most audacious governmental initiatives since
the passage of Medicare and Medicaid in the 1960s now appears to be resulting
in a generational shift in attitudes toward government similar to what happened
in the late 1970s. The seeds of political change appear to have been sown.

Of course, it is possible that in spite of the massive opposition seen in the
election of 2014, a determined administration allied with left-progressive activ-
ist elements will grind their way to a successful outcome over the next few
years. The Obama administration is hoping that their hoped-for results will
eventually become reality. Combined with financial services reform providing
sweeping new regulatory powers to the federal government, new labor initia-
tives designed to increase union membership, and climate change regulations
introduced by executive order after the failure to enact 'cap and trade' legisla-
tion, successful implementation of Obama care would effectively rewrite the
social contract, confirm Obama's take-off status, and reinforce our understand-
ing of the long wave take-off relationship.

Yet conservative and libertarian opposition seems to not only have
stemmed but also begun to reverse the left-liberal progressive wave. An as-
cendant Tea Party Movement has energized the Republican base, contributing
to the Republican takeover of the U.S. House of Representatives in 2010 and of
the Senate in 2014. The politics of midterm elections and the federalist system
of governance have emerged as important roadblocks to an Obama take-off
presidency. The Republican Party now holds a significant advantage in the
House of Representatives, and the Senate, and this is likely to have extremely
dire consequences for Obama's progressive agenda. Republicans plan to use
their position of strength in both Houses to set the terms of debate on a crucial
range of issues, especially the budget and Obama care. Any repeal of Obama-
care would be vetoed by the President, but the Republicans would be in a posi-
tion to negotiate major changes.

The mid-term election cycle is only one component of the broader political
dynamics at work in 2014 and beyond, however. The second component is the
politics of the states. Republicans currently hold more than 30 governorships
across the country, and control many state legislatures. This strength in the states puts Republicans in a position to drive state-controlled policy agendas and to hamper the ObamaCare implementation process. Republican-led states have been moving in conservative directions on other issues. In January 2013 the State of Michigan adopted right-to-work legislation. Other Republican-led states such as Wisconsin and Ohio have moved to limit union negotiating power, again running counter to Obama's new social contract objectives. The result is a polarization between Republican and Democratic states that has been described by some scholars as ‘fragmented federalism’ (Bowling and Pickerill 2013). This polarization makes it difficult to implement the kind of left-liberal progressive agenda envisioned by President Obama without creating massively destabilizing centrifugal forces within the political system. A similar regional destabilization followed President Polk's take-off presidency. Focusing on the slavery question, it led to the attempted secession of the southern states and to the Civil War.

The federal judiciary also has presented a vigorous challenge. Recent decisions establishing that the right to bear arms is an individual right have energized conservative and libertarian forces. Perhaps, the most vitriol from the Left has been directed at a 2010 Supreme Court decision (Citizens United) that allowed groups greater freedom to organize for political action. Framed by conservatives and libertarians as a fundamental issue of free speech and by opponents as a decision that opened the floodgates of money into the political process, the reaction of the Obama administration has been to attack Tea Party and related groups that sought to take advantage of the ruling, making use of agencies such as the Internal Revenue Service to attempt to negate the consequences. The Supreme Court also has issued a series of conservative affirmative action and civil rights rulings that have placed constraints around the progressive agenda.

Another reason to believe the nation may not witness a progressive restructuring is an accumulating set of Washington scandals. We describe them as Benghazi, the Associated Press story, and the IRS Tea Party story. Benghazi revolves around questions of what the Administration knew in the hours just prior to and following the murder of the U.S. Ambassador to Libya, who was killed in the early morning hours of September 12, 2012. There are questions as to why efforts were not made to rescue the Americans, what President Obama was doing in the White House while the attack was underway, and why there was an apparent effort to mislead the public and Congress about the event. The AP scandal involves the U.S. Justice Department monitoring of phone calls by Associated Press reporters, seen as a threat to journalistic freedom and an independent press. Finally, the IRS story, one with possibly the greatest potential for political damage, involves ideological and partisan bias of the Internal Revenue Service in targeting conservative groups, denying them tax exempt
status and carrying out aggressive audits. Involvement of the IRS calls into ques-
tion the integrity of one of the key bureaucratic agents in the implementation of
Obamacare. The IRS, under current law, is responsible for implementing nu-
merous aspects of the new health care system. Should the scandal generate in-
creased distrust of the federal government, not only will the implementation of
Obamacare be made all the more difficult, a sufficient level of distrust to the
federal government may be created that any left-progressive agenda will find
itself under attack by those who advocate a much more modest federal presence
and reassertion of the federalism principle.

It is tempting to think of these scandals simply as exogenous shocks that sometimes perturb the political balance of power. However, the events seem to represent something deeper and more profound than errors made by overly enthusiastic aides, as has been claimed. The IRS controversy may reflect a crisis of the progressive state, borne of a deep antipathy within a liberal governing elite toward those with a broadly conservative political and cultural outlook. Such an attitude, while surely not universal, is now shared by a sufficient number of progressives, including members of Congress and many within the White House, and has become a fundamental threat to the premises of the American Constitution.

Ultimately the connection between the scandals and the theme of this essay is simple. If the scandals come to be viewed by the public as 'politics as usual', then their effect will likely be minimal, at least in the long run. But if they serve to reinforce and deepen what is already a growing antipathy toward Washington elites and the still-vague sense that the federal government is becoming more and more an obstacle to 'life, liberty and the pursuit of happiness', a progressive take-off will be contested by an invigorated return to fundamental constitutional principles. Public opinion polls already register a sense of concern among the general public, consistent with this countervailing move. Some public opinion data suggest that the political system could be approaching a 'pre-revolutionary' moment. Recent surveys show that only a very small percentage of citizens now believe that government has the consent of the governed. This statement, taken from the U.S. Declaration of Independence, was acknowledged to be true by only 22 percent of respondents in one survey. While the numbers are higher for Democrats than for Independents or Republicans, this low percentage is striking. Earlier polls have shown similar results, another poll taken in 2012 found that 58 percent of respondents felt that an 'overly powerful' government is a bigger danger than a weak one, and 51 percent viewed the federal government as a threat to their rights.

Prospective Generational Change?

These beliefs appear to be particularly strong in the millennial generation – the
95 million Americans born between the last stagflation crisis and the most re-
cent deflationary depression, roughly from 1980 to 2007. As a commentator in *The Atlantic* notes (Fournier 2013b):

1. Millennials, in general, are fiercely committed to community service.

2. They don't see politics or government as a way to improve their communities, their country, or the world.

3. So the best and brightest are rejecting public service as a career Path. Just as Baby Boomers are retiring from government and Politics, Washington faces a rising-generation 'brain drain'.

4. The only way Millennials might engage Washington is if they first radically change it.

There is a growing belief that Millennials will produce a radical recon-
struction of civil institutions and government, since they have little faith in tra-
ditional politics and government in a world polarized by the present two-party
system. Predicting ‘the beginning of the end for Washington’ commentators see
one of two results: that the Millennials either opt out of Washington, or that
they might engineer a regime change that replaces the current two-party dys-
function (Fournier 2013a).

This suggests three possibilities, each of which points to a radically differ-
ent future: (1) the establishment of an enduring left-liberal or progressive coali-
tion, the initial stages of which have been put into place by the Obama election
and re-election, that is an Obama take-off; (2) a Republican-conservative resur-
rection over the course of the next one or two election cycles that would result
in a return to a limited government, constitutionalist regime; or (3) fractured
relations between the national government and the states that drive a Millennial
reconstitution in a different form, a profound regime shift. The first two scenarios
assume that possible regime shifts occur within the framework of ‘normal poli-
tics’. The third scenario assumes something quite different: a set of centrifugal
forces that lead to a violent lurch toward a fundamentally different system
characterized by increased decentralization of power and a dramatic shrinkage
of national government authority.

Overview

We thus return to our initial question, will Barack Obama become the fifth
take-off present in U.S. history? As we noted in the preceding essay in this is-
sue of this yearbook (Berry and Dean 2015), he was elected via aggressive cul-
tural identity and lifestyle politics and arrived in Washington with a vision of a
European-style welfare state with a national health program, steep income taxa-
tion that raised tax rates for richer Americans, expanded redistribution of in-
come on grounds of fairness, and a massive expansion of the regulatory powers
of the federal government to constrain financial markets and to counter imag-
ined personal and environmental threats, combined with deficit spending and
the maintenance of a permanently depressed underprivileged class dependent upon the federal government and willing to reelect progressives to ensure that welfare redistributions remain and are enhanced. But what is emerging instead is a 'fractured federalism' that may limit his take-off achievements amidst a rising generation that may prefer a more profound restructuring of the political system.

The situation is not unlike James Polk's presidency and its consequences. Polk's belief in 'Manifest Destiny' did lead to a coast-to-coast nation where yeoman farmers could settle new lands. He also reformed the civil service, created a new Treasury System, and expanded the power of the presidency, but as a slave owner he was ambivalent about that fundamental social issue. Following his exit from the presidency in 1849, the U.S. political system became increasingly fragmented and enfeebled. Pressures revolving around the preeminent question of slavery come to the fore, with abolitionist elements and southern sympathizers taking increasingly polarized positions. These divisions also were manifested in the increased factional tensions within the parties, and particularly the Whig Party, which was torn between its Northern antislavery elements and those sympathetic to, or at least ambivalent about, the question. By 1856 these divisions led to the Whig Party's destruction and the Republican Party rising in its place. The Democratic Party did not avoid its own divisions, but they proved not to be as deep and toxic as with the opposition. The consequences for the nation were dire: two political parties, neither of which were able to address effectively the issue that was leading to secession and civil war. The polarization that was playing itself out on the national stage was replicated in the states: the political 'middle' in American politics, at every level, had come undone. Polk was a take-off president not as an immediately transformative policy maker, but because his actions precipitated growing conflict that ended in the Civil War.

We believe that Obama's initiatives will have a similar effect. What his actions have done is to raise the profound issues of the role of government in our lives and what the relative balance between government, the individual and civil society should be. Tensions between the ideals of a comprehensive social welfare state and the principles of republicanism, limited government and the primacy of the individual may well be coming to a head. Our sense is that both parties have reached, or will soon reach, a point of political and moral exhaustion with neither capturing, even in a remote way, the real concerns of voters. As the long-wave clock moves toward another stagflation crisis within the next two decades, it may well be that the Millennial generation will lead us toward a new, more libertarian order that is consistent with important Republican principles, but one leavened with a deeper social conscience that has been desperately waiting for the right movement for several decades.
References

**Baker P., and Peters J. W. 2013.** As Budget Fight Looms Obama Sees Defiance in Own Party. *New York Times* September, 17. URL: http://www.nytimes.com/2013/09/18/us/politics/as-budget-fight-looms-obama-sees-defiance-in-his-own-party.html?pagewanted=all&_r=0

**Berry B. J. L., and Dean D. J. 2014.** Long Waves in American Politics. Part One: Takeoff Presidencies. *Kondratieff Waves: Juglar –Kuznets – Kondratieff* / Ed. by L. E. Grinin, and A. V. Korotayev, pp. 251–264. Volgograd: Uchitel.

**Bowling C. J., and Pickerill M. J. 2013.** Fragmented Federalism. *The State of American Federalism* 43: 315–331.

**Fournier R. 2013a.** The Beginning of the End for Washington? *National Journal* October, 13. URL: http://www.nationaljournal.com/politics/the-beginning-of-the-end-for-washington-20131001

**Fournier R. 2013b.** How Can Millennials Change Washington If They Hate? *The Atlantic* August, 26. URL: http://www.theatlantic.com/politics/archive/2013/08/the-outsiders-how-can-millennials-change-washington-if-they-hate-it/278920/

**Krauthammer C. 2013.** Charles Krauthammer: Why Liberals are Panicked about Obama-care. *The Washington Post* November, 14. URL: http://www.washingtonpost.com/opinions/charles-krauthammer-why-liberals-are-panicked-about-obamacare/2013/11/14/bd2e9834-4d6f-11e3-be6b-d3d28122e6d4_story.html

**Sunstein J. 2013.** Obama Wants as Second Bill of Rights. *Breitbart News* January, 28. URL: http://cdn.breitbart.com/Big-Government/2013/01/29/Sunstein-Obama-Wants-Second-Bill-of-Rights