What is the Kondratieff Wave?
A Kondratieff wave, also known as a supercycle, refers to a cyclical tendency in the world's economy. This concept was developed in 1928 by the soviet economist Nikolai Kondratieff, who argued that the world experiences inevitable periods of economic rises, plateaus, and falls. These periods were termed waves due to the shape these cycles produce when plotted on a graph. According to Kondratieff, the average length of one cycle is 50 years.
Kondratieff's conclusions were not popular with the Soviet leadership of his era, and were seen as a challenge to Stalin's plans for Russia's future. He was imprisoned and executed in 1938. The waves were posthumously named after him by Joseph Schumpeter, a Moravian economist, in 1939.
There are considered to be four phases to a Kondratieff wave, analogous to the four seasons. The first, spring, is when the world economy is at a plateau or just beginning to improve. Summer occurs when the economy starts to pick up speed and there is a great deal of prosperity. Fall is represented by a recession and another plateau, while winter is considered to be a depression.
Though not widely accepted by most academic economists, the Kondratieff wave phenomenon is quite popular in heterodox, or alternative, economics. Even among its supporters, there is no general consensus about the start and end times of any particular wave. There are also concerns that belief in the theory has caused many to force events into patterns where none actually exist.
Despite the lack of agreement among experts on exactly when the cycles begin and end, it is generally agreed that there have been five Kondratieff wave cycles since the Industrial Revolution. This is known as the Schumpeter-Freeman-Perez paradigm. This idea holds that it is a particular innovation or series of innovations that spurs the spring cycle in a Kondratieff wave. It also theorizes that, once the innovation has saturated the world market in the summer phase, the fall or recession phase begins.
Proponents say that the first modern Kondratieff wave occurred in approximately 1800 with the development of cotton-based spinning and weaving technology, and lasted until 1850. Our world is supposedly in the fall phase of the fifth wave, which began in 1991. This wave deals with innovations in technology, such as bioengineering and wireless applications. The predicted saturation point for this wave is between 2010 and 2020.
It has also been argued that global wars are tied to Kondratieff waves, most notably by American sociologist Immanuel Wallerstein. According to Wallerstein, global conflicts often occur just as the summer phase of a wave is starting, when world production of goods and services are on an upswing. His theories on this postulate that the inflation caused by such wars ultimately leads to the fall and winter phases of the wave.
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