The Predictive Power of Long Wave Theory, 1989–2004.

My work in the mid-1980s on Kondratieff waves tried to explain long waves in terms of causal relationships among six main variables: war, production, prices, innovation, investment, and real wages. I emphasized war as a central element; saw production waves as leading war/price waves by roughly 10-15 years; and saw war,innovation,investment,andpossiblyrealwages as mutually reinforcing mechanisms in the long wave. Based on analysis of historical time series, in 1989 I elaborated a four-phase dating scheme based on the lagged correlations among variables, and discussed the phase of the world system (as of 1989) in terms of that scheme. In this paper I revisit these conclusions fifteen years later and find they had strong predictive power regarding the transition in the early 1990s from the “stagnation” quarter-phase of the K-wave to the “rebirth” quarter-phase (higher production growth and investment, low prices, high real wages, high innovation, and low great-power war). All these variables in the late 1990s fit the expectations of the K-wave scheme, especially the relative peacefulness and low military spending in contrast to the previous phase. Looking forward, changes since 9/11 may signal the onset of a new Kondratieff phase, “expansion.” [ABSTRACT FROM AUTHOR]