In regard to the cheering that greeted Larry Diamond at Berkeley, maybe
I can offer an explanation from the younger generation (Andy A. are you
out there?): the sixties and seventies radicals called the depression too
early. The U.S., Europe, the NICs of Asia, and the rest of the world as
well never had it so good as in the seventies. Growth rates SLOWED, real
income growth SLOWED, but more and more people became more and more
prosperous around the world. Prosperity faltered in the eighties in the
third world, but not in the first. What I would give to have graduated
from college in 1981 instead of 1991 . . . . To the extent that there are
long cycles, I think that 1987 is definitely the break point from
prosperity to decline (as, by the way, I think it is clear that 1929 is
the previous apex). I'm speaking about the U.S. here; whether or not long
cycles are systemic as opposed to partially synchronized national
phenomena is still to be demonstrated.
Now, radicals are notoriously negative about the times in which they live
(reserving prosperity for the prospective future) and I really think that
Wallerstein, Frank, et al have got it all wrong by timing a world
depression starting in 1973. Those, my friends, were the good ole days.
Stock market performances aside,*see footnote* I think that a very good
case can be made that NOW is the down phase. Look at it: price is the
clearest long wave variable, and 1973 - 1983 was the greatest period of
inflation in the U.S. and around the world since -- you guessed it -- the
1920s. The mid-eighties witnessed a rash of bank failures and
primary-producer bankruptcies. The international debt crisis. Now, in
the nineties: zero inflation, DEflation in many goods, especially primary
products, a very very tight employment market (in the private sector as
well as in academia, no matter what the official unemployment statistics
say), corporate and government "downsizing", union-busting, miserly
treatment of the poor . . . you name it. THIS is the depression.
Nonetheless, in a way Wallerstein's prophesies will come true, however.
The long wave is extensively misunderstood. It's not 30 years bad / 30
years good. It's:
year year year year year year year year year year year year
5 10 15 20 25 30 35 40 45 50 55 60
awfulawful bad bad so-so so-so good good great super wow! !!PANIC!! -->
(I hope you like my artwork.)
Now look: if you dichotomize at year 30 and impose phases, all you're
doing is making an ordinal variable nominal, and of course you will find
phases. And if any time after year 1 of the cycle you predict improvement
ten years in the future, you will be right. I'll even hazard a
prediction: twenty years of prosperity from 2025 through 2045. And I
might even be around to find out if I'm right!
(Sorry, Prof. Thompson, I couldn't resist.)
**********
As for liberalism, I repeat my previous protest in this forum: I'm still
waiting for it. "Liberalism" has spread around the world as nothing more
than a word, not even an empty idea. Where is unilateral free trade?
Where is the abnegation of state powers in preference to individual
liberties? Where is the state with no draft, no special favors for
well-connected groups, no political parties, no corporate limited
liability, no immigration or emigration restictions? Democracy is not
liberalism, is not even particularly well correlated with liberalism.
There is not one liberal regime on this planet. Thus spake Salvatore.
**********
Footnote: I think that the recent stock market surge (at least in the
U.S.) can be traced to the granting of federal insurance on bank deposits.
In the last crash (1929), enormous amounts of bank money were destroyed
when banks went under, leading to a huge contraciton in the nation's money
supply. This time, around the same time that the stock market crashed
(1987), banks were going under in droves -- does anyone out there still
remember the S & L crisis and Continental Illinois? -- but no bank money
was destroyed, because of FDIC/FSLIC insurance. Investment opportunities
disappeared with the coming of the long-wave trough, but money in
circulation did not disappear. As a result, interest rates collapsed.
Money poured into stocks, driving up stock prices to truly unprecedented
levels (remember the excitement back when the Dow was flirting with 1000?
I barely do). This was a necessary equilibrium mechanism: stock prices
had to rise in order to bring returns on equity back in line with interest
rates. Just like bond prices rise when interest rates decline, only less
direct.
Salvatore Babones
Department of Sociology
Johns Hopkins University
sbabones@jhu.edu
(Ph.D. expected Spring '98)