A regular attendee emails:
Just curious… Do you think that the current economic state is merely a “normal” manifestation of the Kondratieff wave? I was first exposed to the theory in 1989 in a marketing seminar as the economy was ramping up toward the unforeseen, at that time, DOT BOMB in 2001. Just thought it might be something interesting to weave into your next presentation. Any thoughts?
I am familiar with Kondratieff waves, but I must say I’m pretty skeptical. That our economy – and capitalism in general – is prone to cycles is pretty clear. That those cycles have a regular periodicity is not so clear. In order for me to find any plausibility in theories which claim to have identified some regularity in the cycle it would have to have good predictive power, with fairly sharp predictions. The Kondratieff cycle hypothesis does haven’t very sharp predictions. What you really have is an ex-post justification for the data that we see, and even those that ascribe to the theory, don’t really agree on their identification of the phases of the cycle, making it a less plausible idea. At the end of the day cycles are a function of the collective, yet often idiosyncratic behavior of individuals. I have a hard time believing there is any mechanism that causes these things to occur with predictable regularity. I think you’ll find that this idea appeals to the econo-physicists much more than to any social scientist-economist.