International Perspectives on Social Policy, Administration, and Practice Leonid Grinin Andrey Korotayev Arno Tausch Economic Cycles, Crises, and the Global Periphery International Perspectives on Social Policy, Administration, and Practice Series Editors Sheying Chen Pace University , New York , USA Jason L. Powell University of Lancashire, Preston, Lancashire, United Kingdom [email protected] The Springer series International Perspectives on Social Policy, Administration and Practice puts the spotlight on international and comparative studies of social policy, administration, and practice with an up-to-date assessment of their character and development. In particular, the series seeks to examine the underlying assumptions of the practice of helping professions, nonprofi t organization and management, and public policy and how processes of both nation-state and globalization are affecting them. The series also includes specifi c country case studies, with valuable comparative analysis across Asian, African, Latin American, and Western welfare states.The series International Perspectives on Social Policy, Administration and Practice commissions approximately six books per year, focusing on international perspectives on social policy, administration, and practice, especially an East-West connection. It assembles an impressive set of researchers from diverse countries illuminating a rich, deep, and broad understanding of the implications of comparative accounts on international social policy, administration, and practice. More information about this series at http://www.springer.com/series/7 [email protected] Leonid Grinin • Andrey Korotayev Arno Tausch Economic Cycles, Crises, and the Global Periphery With a foreword by William R. Thompson [email protected] Leonid Grinin Andrey Korotayev National Research University Higher National Research University Higher School of Economics School of Economics Moscow, Russia Moscow, Russia Institute of Oriental Studies of the Russian Institute of Oriental Studies of the Russian Academy of Sciences Academy of Sciences Moscow, Russia Moscow, Russia Arno Tausch Corvinus University Budapest , Hungary International Perspectives on Social Policy, Administration, and Practice ISBN 978-3-319-41260-3 ISBN 978-3-319-41262-7 (eBook) DOI 10.1007/978-3-319-41262-7 Library of Congress Control Number: 2016944156 © Springer International Publishing Switzerland 2016 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifi cally the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfi lms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specifi c statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. Printed on acid-free paper This Springer imprint is published by Springer Nature The registered company is Springer International Publishing AG Switzerland [email protected] Foreword: Of Cycles, Changes, and Transformations There are many orthodoxies about how economic processes work. That such knowledge has become orthodox does not make them either accurate or useful. When it comes to longer-term economics, orthodoxy tends to give way to mystery. Why have some states become so much more affl uent than others? Why do some places remain impoverished while others fl ourish? Why do economic growth rates fl uctuate so much? Why do economies move back and forth between years of pros- perity and years of recession and depression? Once in recession or depression, what does it take to get back to prosperity? Of course, it is not the case that there are no answers to these questions. There are multiple answers but much less consensus about what works and does not work. One of the non-orthodoxies that addresses these types of questions contends that long-term economic growth has come to be characterized by crudely cyclical pro- cesses of 40–60 years duration that are driven by the emergence of new ways of doing things. Periodically, Schumpeter’s “creative destruction” occurs as older practices give way to newer practices. Sunset industries fall away. Sunrise industries blossom. New waves of investment sustain the newer practices and starve more routine and less profi table ways of making money. New waves of infrastructure undergird fundamental changes in how commodities, information and people are transported from place to place. Radical changes in life styles gradually emerge. Where people once walked, they now drive automobiles. In the next iteration, the automobiles will drive themselves. Where people once endured hot and cold weather, they now are capable of insulating themselves from the vagaries of inclem- ent climate. People that once communicated by relatively slow messengers and mail now exchange messages instantaneously using telephones and the internet. Cities and water systems that were once fi lthy with human and animal waste products need no longer be polluted. After centuries of relatively constant living conditions, mod- ern economies have created some ability to re-invent themselves periodically. We are all aware of these changes in some respects and some even seek to account for them explicitly but that does not mean that we agree on how exactly they come about. The source(s) of long-term changes has been attributed to new technology, new types of energy, clusters of investment, profi ts, war, demographic changes, and v [email protected] vi Foreword: Of Cycles, Changes, and Transformations generational changes, among other things. We disagree about how long these crudely cyclical processes have been in play and whether they are likely to persist into the future. Most authors argue for the emergence of long economic cycles (or waves) with the advent of industrialization. Some, however, suggest that one can fi nd earlier precedents even if industrialization certainly made the periodicity and impacts of change more evident. In turn, such an auxiliary argument raises other questions. How uneven are the waves of change? Do some have great impact while others bring about only fairly weak changes. Why? Is the pace of change uniform over time? Is it speeding up or slowing down? If the waves preceded industrializa- tion, is the cyclical behavior likely to persist or take the same format as leading economies move into a post-industrialization phase? We know economics does not occur in a political vacuum. Yet we diverge when it comes time to acknowledge the political structures that provide a framework for these changes. Is it coincidence that some of the states that have become so rich are also the places where new technology and new sources of energy are introduced? Is it also coincidence that these same states assume disproportionate roles in world politics? Yet their rise to prominence and pre-eminence is fi nite. They decline and are supplanted by rivals. Why does that happen? One might think that once a group has ascended to the top of the stratifi cation system, it could fi gure out how to stay on top. But that does not seem to be the case. Britain predominated in the nineteenth century. The United States eclipsed Britain and was most pre-eminent in the twen- tieth century. Some observers think that China will do something similar in the twenty-fi rst century. Is this a function of larger populations? Or, is there a strong link between the economic cycles and political cycles? Moreover, is there a strong link between patterns of economic growth, the rise and decline of pre-eminent political- military actors, and the vagaries of world politics? There probably is literally no corner of human behavior that is immune to re- consideration once one adopts a view that economics (and other activities) are characterized by long-term cycles that are not precisely regular in periodicity. The authors of this book, Grinin, Korotayev, and Tausch, prefer to focus on the economic manifestations and choose to break down the longer cycles (the Kondratieffs, sometimes called K-waves) into shorter variations (Kitchins, Juglars, Kuznets cycles) that have been examined before (although they stress the Juglar here) and highlight one that has received little explicit attention, which they label Akamatsu cycles after a Japanese economist who wrote about the process in ques- tion decades earlier. Akamatsu cycles refer to movements toward divergence and convergence between center and periphery. The basic process in play is that the center initially produces fi nished goods while the periphery supplies raw materials. Some of the technology developed in the center diffuses to the periphery as periph- eral agents attempt to produce more technologically advanced products. This pro- cess has been going on for (see in particular Grinin and Korotayev 2015) a couple of centuries