fifty-six-year economic cycle (Kondratieff)

 
Theodore Modis., Prediction : society's telltale signature reveals the past and forecasts the future, 1992.

p.156
fifty-six-year economic cycle

pp.156-157
Ever since I became aware of the fifty-six-year {56-year} economic cycle, my concern was not whether a Wall Street crash was around the corner but rather what must one do when faced with an immiment stock market crash.  My calculations suggested a crash around 1985, and the minimum precaution to take was stay away from the stock market.
p.157
  And so I did.  Month after month I resisted the temptation to buy stocks.   Colleagues at work would get excited about the bullish market.  Favorable terms were offered to buy the company stock.  People around me watched their money grow daily.  I kept quiet, hoping to be vindicated by the eventual crash ── but nothing came.  Months went by and the market was still growing.  Years when by!  Well into 1987 my colleagues had all gotten richer while I was feeling rather sour.
p.157
   I broke down.  It was fall, the leaves were changing color, and I was going to the mountains for the weekend with a friend.  I had had enough of holding back.  I wanted to be like the others.  Friday afternoon I called my bank with an order to buy.  I left for the weekend with a feeling that I had finally escaped inaction.  I had at last done something, something I would look forward to on Monday.
p.157
   Over the weekend I enjoyed extraordinary scenery, good weather, reasonable food, and friendship.  But there were more important things waiting for me back at work.  Monday, October 19, 1987, the stock market crashed.  I was crushed.  The amount of money I had lost was not so important, but the pain was excruciating.  At the same time, on another level, my beliefs had been reinforced. 
p.157
The system had behaved according to the plan, was if it had a program, a will, and a clock.  I had access to this knowledge early enough.  My error was due to human weakness; I had not been scientific.  The clock was rather precise, but I should have allowed for an uncertainty of a few percent. 
p.157
  At any rate the crash was over and the stock market largely recovered in a few years.
p.157
But what remained the same was our general position in the long economic cycle:  the recession years. 
p.157
The flares in energy prices in Figure 8.3 can be seen as banners indicating the beginning of an economic downtrend, the end of which we have not yet reached.  We will have to wait until 1996 before the growth trend turns around.
pp.156-157
1985
Monday, October 19, 1987   U.S. stock market crash (U.S.)
1996

  (Prediction : society's telltale signature reveals the past and forecasts the future / Theodore Modis.,  1. forecasting., 2. creation (literary, artistic, etc.)
3. science and civilization.,  CB 158.M63, 303.49--dc20, 1992
, )
   ____________________________________
pp.156-157

[ My calculations suggested a crash around 1985 ]
Monday, October 19, 1987   U.S. stock market crash (U.S.)

   (pp.156-157, Theodore Modis., Prediction : society's telltale signature reveals the past and forecasts the future, 1992.)
   ____________________________________

Theodore Modis., Prediction : society's telltale signature reveals the past and forecasts the future, 1992.
written by Theodore Modis

p.148
  The resulting graph, Figure 8.1, presents a picture of regular oscillations.  It is so regular that a harmonic waves ── a sinusoidal ── with a fifty-six-year (56-year) time period can be made to pass very closely to most points.

p.149 
  This periodicity in energy consumption was first observed by Hugh B. Stewart.1  On several occasion before and after Stewart, economists and others have pointed out many human activities that oscillate within a period of fifty [50] to sixty [60] years.2 

p.150
Energy consumption and bank failure

p.155
  Many of the problems the automobile industry is currently encountering around the world can be explained as follows.8  When the number of automobiles reaches the saturation level, the industry becomes a supplier of replacement only.  Productivity keeps increasing, however, because of competition, tradition, and expected pay increases.  A constant level of production coupled with increasing productivity creates redundant personnel and eventual layoffs.  Since saturation coincides with recession, so do the layoffs. 
p.155
  It is not only the automobile industry that is in trouble today.  Most technological breakthroughs become exhausted more or less at the same time because the cluster of basic innovations born together saturate together.  Even if they reach a geographical location late, they usually grow faster there.  The simultaneous saturation in many sectors of the economy generates a progressive reduction in employment and low growth in the gross national product ── in other words a recession.  

p.155
  We can see in Figure 8.2 that such upswings occurred in 1884-1912 and 1940 and 1968.  

p.155
The new activities coming into existence must grow significantly before they have an impact on unemployment and economic development.  The energy clock says that we are now approaching the rock bottom of the recession, the mid-1990s. 
p.155
From then onward the rate of growth will progressively increase, but it will only reach a maximum ── the next boom ── in the early 2020s. 

p.156
[the existence of economic cycles]
A more contemporary scholar, Joseph A. Schumpeter, tried to explain the existence of economic cycles by attributing growth to the fact that major technological innovations come in clusters.10 
An extended list of references on long economic waves can be found in an article by R. Ayres.11

p.156
N. D. Kondratieff
1926
  From economic indicators alone Kondratieff deduced an economic cycle with a period of about fifty [50] years.  His work was promptly challenged.  Critics doubted both the existence of Kondratieff's cycle and the causal explanation suggested by Schumpeter.  The postulation ended up being largely ignored by contemporary economists for a variety of reasons.  In the final analysis, however, the most significant reason for this rejection may have been the boldness of the conclusions drawn from such ambiguous and imprecise data as monetary and financial indicators. 

p.156
indicators, like price 
inflation and currency fluctuations 
monetary indictors

p.156
  Concerning cycles with a period of fifty-six years I have cited examples in this chapter that are based on physical quantities.  Energy consumptions, the use of machines, the discovery of stable elements, the succession of primary energy sources and basic innovations have all been reported in their appropriate units and not in relation to their prices.  The cycles obtained this way are more trustworthy than Kondratieff's economic cycle.  In fact, in the case of energy sources, prices indeed folowed the same cycle by flaring up at the end of each boom. 

p.156
fifty-six-year economic cycle

pp.156-157
Ever since I became aware of the fifty-six-year {56-year} economic cycle, my concern was not whether a Wall Street crash was around the corner but rather what must one do when faced with an immiment stock market crash.  My calculations suggested a crash around 1985, and the minimum precaution to take was stay away from the stock market. 
p.157
  And so I did.  Month after month I resisted the temptation to buy stocks.   Colleagues at work would get excited about the bullish market.  Favorable terms were offered to buy the company stock.  People around me watched their money grow daily.  I kept quiet, hoping to be vindicated by the eventual crash ── but nothing came.  Months went by and the market was still growing.  Years when by!  Well into 1987 my colleagues had all gotten richer while I was feeling rather sour.
p.157
   I broke down.  It was fall, the leaves were changing color, and I was going to the mountains for the weekend with a friend.  I had had enough of holding back.  I wanted to be like the others.  Friday afternoon I called my bank with an order to buy.  I left for the weekend with a feeling that I had finally escaped inaction.  I had at last done something, something I would look forward to on Monday.
p.157
   Over the weekend I enjoyed extraordinary scenery, good weather, reasonable food, and friendship.  But there were more important things waiting for me back at work.  Monday, October 19, 1987, the stock market crashed.  I was crushed.  The amount of money I had lost was not so important, but the pain was excruciating.  At the same time, on another level, my beliefs had been reinforced.  
p.157
The system had behaved according to the plan, as if it had a program, a will, and a clock.  I had access to this knowledge early enough.  My error was due to human weakness; I had not been scientific.  The clock was rather precise, but I should have allowed for an uncertainty of a few percent.  
p.157
  At any rate the crash was over and the stock market largely recovered in a few years.
p.157
But what remained the same was our general position in the long economic cycle:  the recession years.  
p.157
The flares in energy prices in Figure 8.3 can be seen as banners indicating the beginning of an economic downtrend, the end of which we have not yet reached.  We will have to wait until 1996 before the growth trend turns around.
pp.156-157
1985
Monday, October 19, 1987   U.S. stock market crash (U.S.)
1996


pp.169-170
p.169
  We then compared these natural-growth curves to the fifty-six-year {56-year} cycle of energy consumption, which coincides with the economic cycle.  We observed a remarkable correlation between the time these growth curves approach their ceiling and the valleys of the economic cycle. 

p.169
recession coincides with saturation of these technologies. 

p.170

p.170
saturation coincides with economic recession. 

p.171
Between the first wave (rather poorly defined because of insufficient cases) and the second wave, it was canal construction in Russia that continued developing. 
p.171
Between the second and third waves, the traversing process was the construction of oil pipelines in the United States. 

p.171
Product are going through progressively shorter life cycles in a desperate quest for differentiating, and then when the technologies at hand no longer justify it.  The lifetimes of companies themselves are being reduced, with a growing number of mergers and buy-outs. 


p.174, p.176
p.174
I was showing my observation of cyclical human behavior to Michael Royston 
Michael Royston, teaching environmental sciences in the International Management Institute of Geneva
unpublished paper, written in 1982, he talked about the same fifty-six-year cycle but from another angle.5 
pp.174-175
  Royston's thesis: life progresses in spirals and that long-term growth follows a spiral which passes successively through four phases: 
discharge, 
relaxation, 
charge, and
tension, 
after which it returns to the starting point, but enriched with new knowledge, experience, and strength. 
p.175
Figure 9.3  The Royston spiral.
Life Seen as a spiral 
discharge: boom, 
relaxation: recession, 
charge: new order, new technology
tension: growth
p.176
floating compass (1324),
invention of gun powder and gun making (1380),
the invention of the printing press (1436), 
the discovery of America (1492), 
the beginning of the Reformation (Luther and Calvin, 1548), 
the defeat of the Spanish and the rise of the Dutch (1604), 
the arrival on France's throne of Louis XIV (1660), 
the rise of the English Empire (1715), and 
the American War of Independence (1772). 
p.176
  The fifty-six-year periods that followed these events saw successive transfer of powers, 
from the French to the British with the end of the Napoleonic era (1828-1884), 
from the British to the Germans with the new technologies of chemicals, automobiles, airplanes, and electronic power (1884-1940), and
from the Germans to the Americans with such new technologies as plastics, transistors, antibiotics, organic pesticides, jet engines, and nuclear power (1940-1996). 

p.176
Nakicenovic on the U.K. Wholesale Price Index documented since the sixteenth (16th) century. 
p.177
A periodic oscillation recorded over five centuries (500 years)
Figure 9.4
The U.K. Wholesale Price Index smoothed over a rolling 25-year period with respect to a 50-year moving average.  This procedure washes out small fluctuations and reveals a wave.  The periodicity turns out to be 55.5 years.* 

p.177
* Adapted from a graph by Nebojsa Nakicenovic in “Dynamics of Change and Long Waves”, report WP-88-074, June 1988, International Institute of Advanced Systems Analysis, Luxenburg, Austria.  From the article by R. Ayres, “Technological Transformations and Long Waves”, parts I and II, Technological Forecasting and Social Change, vol. 37, nos. 1 and 2 (1990).  Copyright 1990 by Elsvier Science Publishing Reprinted by permission of the publisher. 

p.293
Kondratieff, N. D., 156, 177
Kondratieff barrier, 177, 178
Kondratieff cycle, 156, 181, 182
Kondratieff wave, 177 

  (Prediction : society's telltale signature reveals the past and forecasts the future / Theodore Modis.,  1. forecasting., 2. creation (literary, artistic, etc.)., 3. science and civilization.,  CB 158.M63, 303.49--dc20, 1992, )

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