THE KONDRATIEFF WAVE: A Look Back at the Future by James B. & David Rosenau Shuman

THE KONDRATIEFF WAVE: A Look Back at the Future

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Perhaps it's as wispish as that small voice in the seashell, but something tells us The Kondratieff Wave will make quite a splash with the American reading public. For three reasons: first, it is a very digestible and stimulating book on a very arcane and dismal subject, economics; second, it tenders some incisive and startling predictions about the future of the American economy and the country's sociopolitical mood over the next two decades -- predictions supported by a rather convincing historical model and economic theorem; and third, it makes hash of current macroeconomic thinking in general and the practicality of Keynesian remedies in particular. Essentially what Shuman (a freelancer formerly with UPI) and Rosenau (an investment banker with Merrill, Lynch) have done is resurrect and apply to the U.S. the little known long-wave theory of the Russian economist Nikolai D. Kondratieff, formulated in the '20's to explain capitalist fluctuations and later trumpeted by Schumpeter but now largely forgotten or discredited (Samuelson, however, cautiously says ""it is still too soon to say""). Kondratieff's analysis, built around various economic indicators (price, trade, production data), suggested that the periodic and seemingly irrational economic expansions and contractions experienced in capitalist countries actually form a predictable pattern, a long economic wave lasting approximately 50 years and characterized by upswings, peaks, downswings, and troughs; social and political behavior, influenced by economic phenomena, manifests a similar discernible design. Shuman and Rosenau's application of the cyclical Kondratieff wave finds the country entering a downswing which will last throughout the '70'S, a period of relative economic euphoria marked by falling prices and interest rates and the gradual shift from an inflationary to deflationary condition (cf. previous longwave downswings at 50-year intervals -- the 1920's, 1870's, 1812-20), and socio-politically a decade of postwar turning inward and enjoyment of prosperity. The 1980's however, will be trough -- Depression -- years, if the cyclical theory holds (again, cf. previous Depressions in the 1930's, etc.). The authors matter-of-factly recognize that this ""doubtless will be a controversial book,"" pointing out that ""Professional economists have rejected the long-wave theory out of hand, probably because they have felt it is not scientific. Yet the accumulated evidence of more than 150 years. . . is too consistent to ignore."" Those economists and presidents who are keeping cool with Keynes have a decade of downswing ahead; after that everything might be washed away except the bread lines and apple stands. In any event, The Kondratieff Wave could be a mighty big one.

Pub Date: May 26th, 1972
Publisher: World