Do Kondratiev long waves exist?

Image: Jan van der Wolf
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By VALERIO ARCARY*

There is not, strictly speaking, a theory of long waves, but an almost “hemorrhagic” and inconclusive debate, with several different formulations

“Capital has a constant need to increase the rate of surplus value (…), but its ability to realize these ends does not depend only on objective conditions. It also depends on subjective factors, i.e. the ability of the working class to resist and strike back). And that capacity (…) the degree of self-reliance and militancy of the working class; its degree of autonomy in relation to prevailing bourgeois ideologies; the relative strength of the working vanguard within the class and the labor movement, i.e., the relative strength of that layer of the working class which is qualitatively most independent of bourgeois ideology” (Ernest Mandel, Long waves of capitalist development, a Marxist interpretation, P. 36-37).

Is the historic stage of globalization over? Do sanctions against Russia in the Ukraine war signal an irreversible fracture of the world market? Does the crisis of supremacy in the international system of States, given the rise of China, inaugurate a new arms race, a new “cold war”? Do threats to use tactical nuclear weapons re-present the danger of a world war? Does the dynamics of the financialization of capitalism indicate a tendency towards long stagnation, a new B phase of the Kondratiev long waves? We don't know the answers, but that doesn't lessen the need to ask key questions.

Ernest Mandel constructed an original analysis of long wave theory to interpret the dynamics of contemporary capitalism. He introduced a Marxist ruler into the equation: the social and political relationship of forces between capital and labor, and the disputes between states in the world market. The strong point of long wave theory is the elegance of the idea of ​​rising and falling curves. The human mind is fascinated by symmetry. But the "beauty" of a hypothesis is a trap. Mandel recognizes the danger, and embraces the prospect of uneven and disproportionate long waves.

Perhaps it is useful to observe that there is not, strictly speaking, a theory of long waves, but an almost “hemorrhagic” and inconclusive debate, with several different formulations. Although it is forever associated with the papers Kondratiev published in 1922, the first presentations of the hypothesis date back. Van Gelderen wrote, in 1913, a single work on long waves which, due to the circumstances of a tragic fate that, moreover, was that of his generation – he committed suicide in 1940 during the Nazi invasion – was only translated into Dutch in 1996 and, therefore, was not even known to Kondratiev or Trotsky at the time of the 1928 Russian debate at the Institute of Conjuncture. Pareto also wrote about long waves.

Everyone agreed on the periodization of long phases of expansion and retraction, and on the need to find a framework for theoretical explanation that considered a set of social, political and economic factors. But while Pareto insisted on the importance of conflicts within the dominant class, which would be expressed in an alternation of hegemony between speculators and rentiers, in each historical phase, for Van Gelderen and Trotsky, fluctuations in class struggles and variations in the average rate of profit could not be divorced.

Kondratiev will develop his positions which, for the essence of the debate, rested on the defense that the dynamics of variations was determined by endogenous economic contradictions: a movement of capital turnover slower than the short cycle, due to long-term investments duration, but based on the same causal pattern discovered by Marx for the short cycle, the operation of the law of the tendency for the rate of profit to fall.

The most devastating criticism that is always launched against the theory of long waves is the lack of incontrovertible historical statistical series. Therefore, it is discussed whether or not long cycles exist, and whether statistical measurements deserve credit. These restrictions have at their root the methodological difficulties that result from the attempt to integrate in a unified theoretical model the fluctuations of the economic cycles, and the autonomy of the socio-political processes in the class struggle and in the struggle between States.

The problem seems, however, more complex: much of the criticism of the theory of long waves remains linked to the consideration of an invariable pendulum movement towards equilibrium, an “axiomatic” premise that the “invisible hand” leads the market to make the regulation between supply and demand. But the verification of this tendency towards equilibrium is, to say the least, debatable.

More instigating is the discussion on the causes of long waves and on the different postulates that would explain the passage from phases (A) of sustainable growth to phases (B) of prolonged recession, and more importantly, and much more complex, the inverse passage . This elaboration, which occupied a place in the Marxist tradition, has, however, also a history, very little known, which it would be important, even briefly, to recover: “When Kondratieff’s first essay on “The Long Cycles of Conjuncture” appeared in 1922 , its author was probably convinced that his description and hypotheses would find wide agreement, and he could not hide his surprise at the strong criticisms leveled by Trotsky against his text. In an article published in the summer of 1923, Trotsky used data published by the Times of London to demonstrate that “the curve of capitalist development” took sharp turns from time to time, under the impact of exogenous events, such as revolutions, wars or other political upheavals ( Trotsky's chronology of turning points in the trend was as follows: 1781-1851, 1851-1873, 1873-1894, 1894-1913, 1913. It corresponds very closely to the periodizations presented before him by other authors (...) that Trotsky probably did not know. The convergence of so many authors on chronology, even when working independently of one another, emphasizes the distinctive features of the historical developments of capitalism in the XNUMXth century. This amounted to criticizing Kondratieff for his attempt to present all political factors as endogenous factors , in other words, of ignoring the autonomy of social processes in relation to the economic sphere.”[I]

Trotsky's concerns in the polemic against Kondratiev seem to have been of a twofold nature, and both deserve attention: one theoretical-methodological, and the other political. The first question refers to the danger of unilateral economic criteria, which ignore the centrality of political and social processes in any attempt to periodize capitalism, which is not innocent because the evaluation of the past contains a perspective of what the possibilities for the future are, of what a theoretical formulation would result that: (a) recognizing in the system a capacity for self-regulation in the long term, (in addition to the theory of the cycle of renewal of fixed capital, which in Marx coincides with the theory of crises) called into question the prognosis from classic Marxism that capitalism would have a historical limit, that is, the limits of appreciation of capital itself;

(b) would establish the premises of a “painless” passage to historical phases of expansion, which was in irreconcilable contradiction with the Third International’s characterization of the nature of the epoch of imperialism, defined as a time of exhaustion of the “progressive” historical phase and therefore interpreted as a time of chronic agony in which the permanence of capitalism would have to be considered as a threat to civilization, based on the methods of economic and political counter-revolution.

As for the second question, the danger of the catastrophic generalizations that were predominantly influential in the direction of the German KPD, with the support of the Hungarians, and that supported the prediction of an imminence of the revolution, as if capitalism could have a “natural death”, Louçã clarifies: “Leon Trotsky's speech at the Komintem Congress in 1921, in which he recognized the existence of different phases and conjunctures of capitalist development, marked the opening of the Russian debate. Trotsky (…) could not ignore Sturm und Drang's conception of periods of capital expansion, followed by periods of recession: his intervention implicitly rested on this conception and opposed the leftist position of Bela Kun and the leadership of the German KPD, which defended in Congress the thesis of an imminent revolution, due to the collapse of capitalism, and deduced from this that it was necessary to go on the offensive (...) engaged in another political battle at the time, against Bukharin and his idea of ​​perpetuation or stabilization of the capitalist system. This is why Trotsky rejected the notion of the economy's capacity for self-adjustment up or down and the abandonment, as with Kondratiev, of any strategic dimension. However, Trotsky's successive positions in 1921 and 1923 were coherent for him, it was the main (exogenous) political events that determined the reversals of the long wave, both downwards and upwards.[ii]

In summary: Trotsky doubts an endogenous “economist” approach to the theme of capitalist development in the long term, and argues that the ebbs and flows of the class struggle affect the fluctuations of economic processes, as much as the latter affect the former.

But the recognition of the centrality of exogenous factors, the exteriority of the class struggle in the theoretical model, as a condition for a new phase A, replaces the debate on the regularity of long waves. This is because, being politico-social, they would be random, and depend on processes in class struggles, with their uncertainties. This is Bensaïd's methodological concern: “If there is no law symmetric to the tendency of the rate of profit to fall, nothing proves that the upward reversal is inevitable and predictable. When Trotsky declares it random (resulting from 'exogenous' factors), strategic stakes and theoretical rigor go hand in hand. If it depends on social, political and military factors, why should the general cycle have a relatively regular periodicity of about sixty years? Marx, moreover, found himself confronted with a similar difficulty in connection with the industrial cycle, for which the turnover of fixed capital does not provide a sufficient explanation. The wear and tear of this capital is in fact not purely technical, but moral and therefore variable. Distributional conflicts between classes (rather than simple competition between capitalists) are, in the last analysis, the mainspring of technical change itself. It remains to be determined how the relative regularity of the cycle imposes itself despite everything through the uncertainties of the struggle. [iii]

That is, Bensaid identifies that the central methodological issue would be to identify whether the operation of a law parallel to the downward trend in the rate of profit which, for Marx, is at the root of the short cycle, is also manifested in the rotation of the long waves.

The problem with the hypothesis that defends that exogenous factors would be indispensable for an explanation of the resumption of growth, roughly speaking, a historical defeat of the workers to guarantee political stability of the system that offers security in the immobilization of large masses of capital, lies in the difficulty of explain the regularity of the waves of approximately half a century.

If class greed and greed is related to the oscillations of the class struggle or, to some extent, conditioned by social and political processes, fluctuations in investments would be, in the end, unpredictable, because the inversions of the power relations would be random. . Therefore, there would be no serious possibility of building a theoretical model for the long cycles of fifty years. We would be facing a statistical coincidence.

This is the “Achilles heel” of the Kondratiev hypothesis, pointed out many times. Without these pressure forces guaranteeing the endogenous transition beyond fluctuations in class struggles, it would seem that the whole edifice of long wave theory would collapse.

Defenders of the theory of long waves would counter-argue that economic fluctuations are not reduced to the replacement, every ten years (or even less), of a new family of industrial equipment, the immobilization of fixed capital that is at the root of the short cycle. They defend, in short, the importance of long-term return investments in infrastructure (energy, transport, communications, etc…), managerial innovations (Taylorism, Fordism, Toyotism.), and new productive branches (micro-electronics, biotechnology , etc…), which would establish new historical conditions for the accumulation process.

These qualitative changes, with the immobilization of gigantic masses of capital, with long-term returns, would also respond to the pressure of the downward trend in the average rate of profit, but with a much slower period of capital turnover.

Would this economic explanation be satisfactory? It is widely accepted that the typical financialization of the last thirty-five years, the search for capital appreciation outside the productive sphere, is not an atypical phenomenon and, although on a different scale, it would have already occurred, previously, in the face of overproduction crises and exhaustion of markets.

The entire theoretical-historical problem consists precisely in explaining why these colossal masses of capital, previously sheltered in securities and highly liquid assets, would shift to productive investments, leveraging a new upward wave. These arguments do not, therefore, seem conclusive to justify the political-business decision on investments whose return would only be predictable over extended periods.

But since it seems unreasonable to include the outcome of class struggles as an internal factor in capital's long-term rotation movement, because its results would be unpredictable, we are recognizing that the periodicity of long waves must be variable.

In short, we are facing an open question: how can we consider the hypothesis of long cycles, if the most satisfactory theoretical solution for the rotation movement of Capital leads us to the conclusion that the periodicity would be uncertain? So variable that they would not be predictable cycles. If they are not predictable, they are not regular cycles.

*Valério Arcary is a retired professor at IFSP. Author, among other books, of No one said it would be Easy (boitempo).

 

Notes


[I] LOUÇÃ , Francisco, “Ernest Mandel et la pulsation de L'histoire”, in ACHCAR, Gilbert. The Marxism of Ernest Mandel, Paris, PUF, 1999, p. 82/3.

[ii] Ibid.

[iii] BENSAID, Daniel. La discordance des temps: esseis sur les crises, les classes, l'histoire. Paris, Les Éditions de la Passion, 1995. p.72).

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