Past Cycles Might Predict Our Future
By: Lives
Tags: Generation, Economics, Kondratiev, Sociology, Futurism

Image courtesy of Wikipedia Commons

Long-term repeating cycles offer a surprising prediction for the next 10 to 15 years — things might get a whole lot better!

Our happiness and well-being are determined by our individual circumstances, our luck, and our efforts and abilities. But they are also strongly affected to a surprising extent by medium-to-long term society-wide cycles, some of which take place over generations. Being born or graduating at the right time can have massive effects on the assets and wealth of a favored cohort (like the boomers) and weigh heavily on the poor, unlucky Millennials. For example, entering the job market during a recession can affect the earnings of new grads for a whole decade.

Some of this seems random, and some of it is indeed random. But we can alternatively understand historical socioeconomic conditions as a series of cyclical movements that repeat at predictable intervals over time. Several popular generational theories speculate that high and low economic growth, and high and low social stability, alternate over a number of years or even decades; each of these can offer some insight on what we might expect to happen over the next 5 to 10 years. Now obviously, there is some risk in doing this. All of these theories are abstract and somewhat non-intuitive; each relies on extrapolating past behavior into the future. This is not a method I typically use to understand events and so I’m a little hesitant to be too confident or definitive with any predictions here; there is no guarantee that patterns that have existed over the past few hundred years will continue to hold. There are also no assurances about when each cycle might end and the next begin. If Trump wins, the timeline is definitely due for a shakeup! However, some of these patterns are quite obvious and evident, and together they provide some surprising insights. I’ll look at each one in turn, starting with the most widely accepted of the bunch.

1: The Economic Cycle

Anyone who has studied economics knows that recessions and expansions happen on a consistent though somewhat irregular basis. During an expansion, growth increases along with profits, but so do costs, inflation, and inefficiency. These factors put a drag on the growth, which then slows or even decreases; unemployment increases and wages show downward pressure. This typically happens over the course of a few years to close to a decade, but on average it takes about 5 years. Repeat, repeat, and endlessly repeat. Over the last decade, the stock market and corporate growth have shown a long but slow expansion, which has suddenly been brought to an end by the pandemic. We are now seeing the worst employment and business failure rates since the great recession, and many of those losses will be permanent. However, even now there are signs of life in many industries (especially in the FIRE industries), and many economists feel we are due for a strong bounce-back within a few years as we move away from the pandemic.

2: Strauss-Howe/Generations

We can look back through the past few centuries and see a repeating pattern consisting of a positive and ordered period, followed by an era of disorder and retreat, with the full sequence taking 30 to 40 years. For instance, the postwar period from 1946 to the early ‘60s was a stable time of growing prosperity. After that, the later part of the ‘60s and early ‘70s were marked by protests, unrest, dissatisfaction, and anger. One contains the seeds of the other, as complacency and comfort generate tension, and chaos in turn brings about a weariness and desire for normalcy.

Strauss and Howe, in their book “Generations”, describe a parallel long-range generational cycle of about 80 years; this consists of two loops through the pattern I just described, as it articulates the social and psychological changes through four consecutive generations (or cohorts). Their book has been criticized for trying too hard to tidy up events into theory, and it admittedly has a new-age feel and at times veers into unsupportable pseudo-science, but it does contain some fundamental truths, such as the contrast between recessive and dominant generations. Prosperity flourishes in recessive generations, when either institutions or individuals but not both, are strong. Conversely, disorder appears during dominant generations when either there is a battle of wills between strong institutions and individualistic rebels (the rebels typically win), or when both society and individuality are weak and discrete factions fight for control. We are currently living through a dominant era — institutions are weak and distrusted and individualism is being increasingly criticized and questioned; what we are really seeing is sub-tribal conflict that cannot be brought under control. However, after the current conflict, this theory predicts we may move into a “high” period again. My prediction is that the chaos will dissipate and institutions will eventually be remodeled to withstand future stresses, while individualism remains subdued. While the next decade may be a time of stifling conformity and/or bad news for the arts, this is usually a growth period for society. Within a few years, we should see the start of an era that resembles the 15+ years of post WWII calm.

3: Kondratiev Waves

Economically, there is a similar theory known as a Kondratiev wave, which posits waves of 40 to 60 years; Each wave begins with a crest of high-growth before subsiding into a trough of stagnation. As with Strauss-Howe, this has faced some criticism for trying too hard to pattern-match history into a predictable sequence, but it gets credit for having at least loosely predicted each new cycle that has occurred since its 1925 publication. We’ve now been in a stagnant period since about 2008, which coincidences with the Great Recession and its fallout. The theory predicts that we are due to start an upswing soon that should crest in the late 2020s to early 2030s. Regardless of the timing, there are objective reasons for hope. Each high-growth cycle has an industrial driver (the electric grid in the early 1900s; home appliances and modern automobiles in the 1950s; and corporate computer systems and IT in the late ‘80s and early ‘90s), and we are now beginning to see the possibilities in AI-development, green technology, and genome sequencing that could power the next wave.

Put these three theories together and a thought-provoking projection appears. We’ll be entering positive territory on all three cycles over the next few years. No, I don’t think we’ll see glory days next week, or even next year; there is simply too much chaos to go around right now. But these cyclical theories provide a rational basis for some cautious optimism and some hope for a better future.

Of course, when we look to the news and/or social media, we don’t see this optimism. We just see gloom and doom. Why the mismatch? Well, there are some reasons for that, and a lot of it is human nature. I’ll go deeper into this in my next essay.