Kondratieff and system

It's not all that complicated, but there's more to K-cycles than one would
suppose.  The claim for the existence of K cycles is based on observations
of "global" prices and other indicators.  However, as the late T.K. Hopkins
liked to point out, the stats are not really global, but averages of
national measurements.

Anyhow, given the problems of measurement, it's claimed that modern
world-economic history involves periods of 20-40 years (the cycles are
getting shorter) in which most businesses in most states are growing
relatively (the A-phase), and this is followed by a 20-30 period in which
growth is slower, or even declines for some.

It is argued generally that the causes of the downturns are systemic class
struggle and overproduction.  Regarding the former, workers demand higher
wages, better conditions, regulations, etc. which eats into profit rates
(though for a time also stimulating growth via increased purchase power).
Regarding the latter, capitalists compete for market share (and on prices to
some extent), and in so doing, they produce more than consumers can purchase
at given wages, which usually do not rise as fast (lest profit margins
fall), which leads to a cut back in production and a switch to financial
investments or speculation and layoffs, which ends in a period of global
price competition.  This is the downward spiral of stagnation of the B-phase
that is punctuated by 5 year business cycle "depressions" and "growth
spurts" but exist within a period of relative stagnation.

Wallerstein argues that B-phases have been turned into A-phase cycles when
workers begin organizing against the worsening conditions and as capitalists
incorporate new areas of the globe via imperialism/investment/regular trade
and take advantage of low cost resources and labor.  The cheap inputs to the
system raises world-economic profit rates (and core consumerism), and
stimulates a new round of investments in production (labor saving technology
etc.) that further increases global profit rates and investment in
production (reversing the prior emphasis on speculative investment).
Meanwhile, workers in the core (including the new core areas, e.g. the US
1870-1940) and semi-periphery have organized against the crisis via unions
and struggle for a larger piece of the pie.  The concessions they wrest from
capital increases demand and stimulates growth again, which has been off
set, for a time, by investment in labor-saving machinery and incorporation
of the new areas.  They make further gains during the expansion.

The past and ongoing struggles eat into profit rates, but not quite as fast
as competition among capitalists heightens among emerging semi-peripheries
and new core areas (e.g. today, the East Asian NICs, Japan, Latin American
NICs) precisely as a result of the expansion (e.g. 1945-1970).  So, the new
sources of cheap labor and resources become relatively scarce (eating into
profit rates) at the very same time that overproduction from competition for
market shares arises, causing the downward cycle to begin again.

Wallerstein points out that there is a temporal limit to the cycles (they
cannot recoup forever) because there is a spatial limit to the expansions
(the earth is finite).  That is, since there are no "new" areas of the
world-economy to incorporate, so it is likely that our world-system will
enter into a period of stagnation from which it cannot extricate itself
during the next century as China and India -- the last two bastions of labor
reserve -- industrialize.  The severity of the economic depression will lead
to political-systemic breakdown and the demise of the system.  But how it
plays out and what follows is unknown, and hinges in part on how movements
organize now to handle and direct the chaos.

Arrighi (1994) has a different take on the systemic process, though it
builds on IW's "three hegemons."  Arrighi questions the existence of
Kondratieff cycles and argues for "systemic cycles of accumulation" instead.
In his view, there have been three long upward swings of expansion led by
three "regimes of accumulation" (each led by a hegemonic power). Each cycle
involves innovation of the political-military structure of world-rule (the
rules of the game), which involve new innovative "systems" of production and
trade (e.g. British colonial, "workshop," financial hegemony followed by the
US high-tech military, de-colonized "free enterprise" political rule built
upon Fordist-Taylorist vertically integrated continental factory system of
production).  Each cycle of accumulation has involved growing complexity,
commodification, and deepening of the world-economy and interstate
structure, which peaks in a financial "rebirth" and ends in systemic chaos
(world-war) in which the new centers of accumulation, brought into existence
via the order created by the hegemon, compete with the hegemon and each
other.

So, there's much more to K-cycles than meets the eye.
elson

>-----Original Message-----
>From: owner-wsn@csf.colorado.edu [mailto:owner-wsn@csf.colorado.edu]On
>Behalf Of Anthony S. Alvarez
>Sent: Tuesday, February 01, 2000 12:18 PM
>To: WORLD SYSTEMS NETWORK
>Subject: Kondratieff Wave?
>
>
>
>Would someone be so kind as to explain how Kondratieff Waves operate to
>lowly a undergraduate? While I recognize that they are "40-60 year
>business cycles" usually divided into an upsurge a-phase and downtrend
>b-phase, I'm a little foggy as to what the exact mechanisms behind this
>cycle are. Is it related to the falling rate of profit? Market
>saturation? Technological change? Further, whatever lay at the root of
>Kondratieff Waves, what makes them cyclical? It seems to me that at least
>the dimensions I have listed above are historically contingent and don't
>lend themselves to reiteration that the 'wave' terminology applies. In my
>mind, the very idea of something being cyclical comes very close to
>'naturalizing' a phenomenon. But, I could be, and probably am, very
>wrong. Any clarifications would be greatly appreciated.
>
>Anthony S. Alvarez
>University of Maryland, College Park
>Undergraduate in Sociology and Political Science