An authoritarian resurgence may just be signalling the end of a technology cycle
On an unrecorded day in 1938, Soviet economist Nikolai Kondratiev was sentenced by his government to life imprisonment in an old monastery town east of Moscow.
But the condemned didn’t end up serving much of his sentence because, on the same day of the ruling, Kondratiev was taken to a park on the outskirts of the city and executed by firing squad.
His crime had been to write in a public journal that a mixed market economy would perhaps be more beneficial to the Soviet Union than a fully centralised one; something that — published as it was under Joseph Stalin’s reform campaign — proved fatal.
But Nikolei Kondratiev was not an ordinary Soviet academic, having been at one time among the USSR’s most esteemed economists. His reason for daring to write such a thing was that he believed he’d discovered a fundamental law of economic history. Namely that empires and nations rose and fell because of the fluctuations of a technology cycle. Beginning with a period of innovation, followed by a phase of corruption and finally collapse.
First formulated in the 1920s, his basic theory was this: since the 18th century, the global economy had experienced a series of upswings and downswings that lasted around 40 - 60 years. As well as periodic busts and booms (which we know today as the business cycle), Kondratiev believed that there was also a much longer cycle governing the forces of history. He noticed that these upswings saw large groups of innovations which he called ‘innovation clusters’ and that the downswings were characterised by larger instances of wars and deterioration which then cleared the way for a new round of inventions.
Most significantly of all, unlike his contemporaries, Kondratiev didn’t think that ‘the long cycle’ as he called it, was the result of wars and economic crises. Instead, he believed it was the cause of them.
The upswings Kondratiev wrote about were the following; the 1780s with the development of steam power, the 1840s with electricity, the 1890s with the railway, and the 1930s with petroleum. Later students of his added on an upswing from the 1970s onwards led by computer technology. While devoted followers even traced his long cycles all the way back to 10th century China.
What he actually believed about the upswings is complicated but it appears to be something like this; people in different parts of the world naturally seek to improve their condition, and to do this they try to innovate. Once an innovation breakthrough is discovered, it can be applied to many other industries so returns on investment grow. Over time however the returns are diminishing as the applications become fewer until everyone is left searching for the next breakthrough.
An example of this is the steam engine, first developed to pump water out of coal mines, its use was expanded to textile mills, grain mills, water heating, ships, and eventually trains. Each new application of the engine yielded greater productivity but over time the usefulness of the invention ran its course until a better technology, namely the diesel engine, had to be invented to replace it.
The concept of innovation clusters driving major wars and economic history was far from uncontroversial when it was first suggested by Kondratiev in 1923. With other Soviet academics labelling him a ‘reactionary’ for suggesting that the weaknesses of capitalism were self correcting. The economist himself was undeterred, admitting that the concept was vague and could only be said to be a ‘probable’ factor, but he remained committed to his theory up until his execution.
Some more sophisticated critics pointed out that while the ‘long cycle’ did seem to exist in the case of global prices, when measured in industrial production it only applied in certain places at certain times, and was not global. Many Soviet reformers like Trotsky liked the theory and agreed that long waves existed, but denied that they could be a central factor. Instead they believed the global economy simply grew at a steady rate, but was interrupted by periodic crises that were random but only looked cyclical.
Whatever criticisms one can level at Kondratiev, the fact is that his theory made predictions that have lasted well beyond the economist’s lifetime. Predicting for example a downturn in the 1930s and a subsequent 50 year growth period until the 1970s, both of which actually took place. Meaning they are probably worth more attention than the average Marxist diatribe.
It took until the 1970s for the theory to gather widespread attention in the West. During this time the theory was combined with separate ideas about wars which scholars became very interested in while under the prospect of nuclear annihilation.
In 1973 an oil crisis had triggered a global recession and civil conflicts had broken out. Scholars noted that up until that point great power wars had occurred at every down interval with increasing intensity, but not so in the 1970s. They concluded that what had changed was nuclear weapons, which meant the threat of great power war posed too great a cost. What happened instead however was that the decade became a period of sweeping authoritarianism, with the number of autocracies reaching an all time high of 82 in 1976.
The next 50 years (again in line with Kondratiev’s theories) was a period of global economic growth which propelled much of the third world out of poverty. It seems in retrospect that the long cycle from the 1970s onwards was driven by an emergence of computer technology that was applied to finance, logistics, communications, smartphones, and eventually social media. This long up-cycle it seems may have finally reached its end.
This does correspond with the general feeling that technological innovation in some areas is slowing down, that the improvements of the iPhone get less impressive with every iteration. That since the early 2010s there aren’t really any new apps that excites anyone. Except that rather than being caused by a lack of imagination from silicon valley entrepreneurs, this may be because computer technology is nearing the end of its potential. This is further qualified by announcements a few years ago that microprocessors are nearing their smallest possible size.
The current state of the literature on ‘long waves’ supports the idea that the cycle is driven by technological innovation. The explanation being that over time the benefactors it creates tend to grow corrupt and complacent, governments tend to over-regulate, and new great powers arise following the same growth model leading to conflict and eventual slowdown.
On the face of it then, our own time of censorship, surveillance, lock-downs, and big-data, is probably best understood as being the end of a long cycle, rather than a new permanent state of global autocracy. And while covid seemingly emerged from nowhere, there was already a global trend in censorship and democratic decline from 2005 onward.
No fear, say many researchers, we just need to wait for the next round of innovations. The next long wave will surely come from AI, biotechnology, or renewable energy. But in reality, no one has any idea where a technological breakthrough will occur, such industries are unpredictable, and it will inevitably be some time before an innovation able to capitalise on an industry takes place.
The existence of the long wave cycle, if true, is not a sign that it’s fine for free societies to do nothing during a democratic recession. The same studies showed that the effects of the long cycle change across periods and shorten or lengthen based on external factors. It is still possible for the effects of crises to be mitigated or be worsened, and for conflicts to be avoided or instigated based on decisions made.
The effects of a long technology cycle may be impossible to avoid, but in the end the growth periods themselves are created by innovations. Which has to come from innovators. Kondratiev who first discovered the long cycle was executed by his government for having an outlying opinion. It is for that reason that the innovations that fuelled the last long wave came from the democracies of the world, and not from the government that executed him.
After recognising that this sad state of affairs will one day end, it is only possible to conclude that outside of avoiding conflicts, there is one thing the free world can do, which is to allow democracies of the world to do what they do best. To innovate their way out of the down cycle.
John Martin