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Re: Current position in the K-wave (corrected) by Mike Alexander 06 September 2001 23:03 UTC |
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I haven't read Arrighi as of yet, but I can address the 1945-70
dating. In his Long-wave rhythms in economic development and political
behavior, Brian Berry develops the idea that there are two boom/bust cycles
per K-cycle, not one. The stock market analyst P.Q. Wall has given
seasonal names to these periods: the A phase boom is Spring, the A phase bust is
Summer, the B phase boom is Fall and the B phase bust is Winter. My view
is we are transitioning from Fall to Winter now. The 1945-70
period corresponds to a Spring period.
Seasons can be visualized in GDP by dividing the GDP by its long term trend
value. I obtain this trend by doing a running regression of ln(GDP) versus
year over a 100 year period, centered on the year of interest. Thus, the
trend GDP for 1850 is obtained from the regression equation for the period
1800-1900. After 1950 a fixed regression equation obtained from the
1900-2000 data is used, and before 1839 a fixed regression equation obtained
from the 1789-1889 data is used. Here is what a plot of GDP/GDP trend
looks like:
The fine line is the raw ratio, the heavy line is a running centered
nine-year moving average. The K-peaks and K-troughs show up as troughs on
this plot and are labeled in bold. Technically the K-peak is actually the
Schumpeterian primary recession that comes immediately after the "true" K-peak
in monetary terms. Hence we have K-peaks in monetary variables in 1814,
1861/4, 1918/20 and 1981, and primary recession troughs in GDP immediately
following in 1816, 1865, 1922 and 1983. We have GDP troughs in 1789, 1843
and 1896 closely associated with monetary troughs in 1787/9, 1843, and
1897. The GDP peaks at the transition from boom to bust in the middle of
the upwave (A phase) and the downwave (B phase). These peaks define the
spring/summer and fall/winter transitions. Hence we see spring peaks in
1803, 1853, and 1909 that correspond to Arrighi's 1970 growth peak. Notice
that each of these peaks occurs about 11 years before the following
K-peak in 1814, 1864, 1920 and 1981. The eleven year period from the GDP
peak to the K-peak, plus the primary recession is the Summer period. US
stocks show a cycle analogous to that of GDP, which is the topic of my first
book (see my sig file). The GDP figure appears in that book as does the
concept of seasons. One can also find "seasons" in GDP in British and
French GDP as shown in the Table below. They also show up in 18th century
British industrial production.
Table 4.1. Kondratiev seasonal cycles in British, French & U.S. GDP, and
U.S. Stocks
1British price data in italics, U.S. price
data in normal typeface (P indicates K-peak and R a
trough).
2Dates in bold mark Kondratiev peaks and troughs 3Industrial Production-based values in italics 4The data ends in 1975, at which point the trend was still up The Depression and World War II really threw a wrench into the
cycles. Government economic management that was introduced in response to
these events has produced the twentieth century price revolution and
practically eliminated the cycle in GDP. The cycle in stocks is stronger
than ever though. GDP is pretty useless for detecting the cycle
today.
This seasonal structure to the production-defined K-cycle is a new thing
that came with industrialization. This structure can be related to
Schumpeterian-type models for economic growth. Before industrialization,
production/trade cycles or what I call real cycles (as opposed to
monetary cycles) tended to approximately align with the monetary cycles. I
characterize pre-industrial real cycles using the leading sector method as
previously described. Leading sectors also can be related to Schumpeterian
models. Post-industrial leading sector clusters or "new economies"
necessarily peak before the monetary K-peak. For the
pre-industrial world, clusters of leading sectors may peak before or after the
K-peak.
I obtained a set of monetary-based Kondratiev turning points and a set of
real-based turning points. The two are aligned in a statistically
significant fashion. The two can then be combined to form a composite
cycle that compares well with Goldstein's scheme.
Table 4.4. The K-cycle turning points
2The 1483 price peak was not well-characterized and so was averaged with the 1494 real peak to give 1489. Goldstein has an extra cycle in the late 14th century and early 16th
century. The first doesn't show up in British prices (although it may in
French prices, which is what Imbert used, from whom this cycle was obtained by
Goldstein). The second shows up clearly in monetary data, but was not
confirmed by leading sectors. It also does not show up in the social
cycles.
Mike Alexander, author of
Stock Cycles: Why stocks won't beat money markets over the next 20 years. http://www.net-link.net/~malexan/STOCK_CYCLES.htm I'd much like to
hear your detailed reactions to Arrighi's work, in particular, the Long 20th
Century. He and Wallerstein argue for a 1945-70 A phase by measurement of
material production growth, followed by a period relative decline in growth
rates. However, Arrighi embeds these cycles within hegemonic cycles.
The end of a B phase is the start of a financial rebirth in which capital puts
relatively more money into speculation than production. Hence the
stagflation of the '70s and the financial boom since (until now). In other
words, prices alone might be misleading. Arrighi thus suggests that we
distinguish
the production and financial cycles from each other, and relate them to the rise
and demise of hegemonies, the accompanying global governance structures of
capitalism, and to structural changes such as core deindustrialization, semi-p
industrialization (and attending changes in anti-systemic
movements).
Elson
Boles, Ph.D.
Dept. of Sociology Saginaw Valley State University | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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