Economic Outlook and Predictions in the 1970s

Learn about the economic history of the United States and how the Kondratieff Wave is used to make economic predictions.

| March/April 1977

Just as Carter's campaign promise to "sweep out" the ingrown Washington Establishment has already miserably failed to materialize (not a few, but most of his "new" administration's key figures are warmed-over Kennedy, Johnson, and just plain garden-variety Washington has-beans) ... so, too, has his promise of bold, new, decisive economic policy failed to materialize.

What we're presented with, instead, are the usual tired old fiddlings around with token tax cuts here and increases in already-bloated government spending there. More of the same old threadbare Keynesian "solutions" — in other words — that never have, do not now, and never will really and truly solve anything.  

(At best, such "solutions" only postpone the inevitable ... at their much more characteristic worst, they reinforce and magnify the inevitable while postponing it so that — in the end — it becomes just that much more terrible and destructive. As British Prime Minister James Callaghan said to his country's Labor Party last September 28: "We used to think that you could just spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you, in all candor, that that option no longer exists, and that insofar as it ever did exist, it only worked by injecting bigger doses of inflation into the economy followed by higher levels of unemployment as the next step. That is the history of the past twenty years.")

But be ye of good cheer. Because, if an old Russian economist by the name of Nikolai D. Kondratieff was right, the self-pompous politicians and economists of the world really aren't nearly as important as they think anyway. For, as Kondratieff saw it, all their theories and proclamations and taxes and tax cuts and spending programs are definitely not the prime movers of the economy that they claim them to be. Such "actions," instead, are really only the sometimes-dazed and sometimes-studied but almost always irrelevant reactions to much larger forces at work in the universe. Forces that will always move at their own pace and in their own way no matter what our political and economic "experts" do. ("There is a tide in the affairs of men. . . . " and all that, you know.)

Well, whether or not you choose to believe Kondratieff (the communists certainly didn't ... after their successful revolution in Russia, they sent this Agricultural Academy professor and head of Moscow's Business Research Institute to prison in Siberia, where he died), it is interesting to compare his idealized 54-year economic cycle with the actual recorded cycle of U.S. wholesale prices from 1800 to the present. And, son of a gun. As the accompanying chart shows, there is at least as much as meets the eye to ole Nikolai the K's ideas.

Now is all this just coincidence? Perhaps. But it's an interesting enough coincidence to cause Professor Joseph A. Schumpeter, who has been called the world's foremost authority on business cycles, to introduce the Kondratieff Wave concept to the Western world. And it's an interesting enough coincidence to inspire other economists to trace what seems to be the same 54-year wave all the way back to 1260 in English agricultural prices. And it's an interesting enough coincidence to make you wonder if Immanuel Velikovsky really knew what he was talking about when he stated that the ancient Mayans used to fear a calamity of some sort every 54 years.

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