This expanded view of Cycles in the economy is a spinoff from
economic analysis found the Time Matrixes
under 2. Business & Economy
through the 2000s
Cycle Composite graphs of Kalarhythms are made by merging the Physical Cycle, Emotional Cycle and Intellectual Cycle into a single Composite Line. This yields a year by year average of the overall energy level of the three Cycles. The Cycle Composite forms a wavelike pattern with about 50 to 60-year spans between Peaks and between Troughs that coincide with the rises and falls of the US economy. First is a look at the Composite of the Cycles by themselves.
Figure #ma-01 shows the Cycle Composite for the Kalarhythms of the US:
Kondratieff Revisited brings up a previous look at the wavelike trend of western economy. It shows how old ideas are be relevant to today, which suggests that ideas today may be be relevant tomorrow. Nikolai Dmitryevitch Kondratieff was born in Russia in 1892. He was director of an economics institute in Moscow from 1920 to 1928 and he developed a theory of long wave economics. By studying fluctuations in wholesale prices and interest rates in the US, UK and France form the 18th century through the 1920s he found a pattern. His findings were released in Russian as "The World Economy and Economic Fluctuations in the War and Post-War Periods, (1922), and "The Great Economic Cycles" (1925). Kondratieff's conclusion was that it is the inherent nature of the western economy to go through a Cycle of expansion and contraction lasting about 50 years. Changes in production techniques, wars, revolutions, and the opening of new markets were more than coincidence in his view.
After a long term upswing, Kondratieff observed, expansion into new markets followed, (in a Kalarhythm Cycle, a rise through the 4th Qtr. & 1st Qtrs. will lead to the 2nd Qtr. of Improvement, Expansion and Variation). Kondratieff said that on a downswing, a capitalist economy renews itself in a cleaning out period in which it gets rid of the dead wood. In this, he was observing what can be seen in 3rd Quarter of Kalarhythm Cycle
that goes through a period of Regression and Reform. Kondratieff noted that capitalism renews itself as part of a Cycle. This made the Soviet leadership very unhappy. They dubbed Kondratieff a right winger and arrested him in 1931. He was never seen or heard from again.
Kondratieff's work became one of the most widely known economic Cycle theories and is referred to as the Kondratieff Wave, K-Cycle, or K-Wave. Economist Joseph Alois Schumpeter believed that the correct duration of the K-Cycle was 56 years. Analysis of the K-Cycle vary and other economists described the K-Cycle as lasting from 49 to 54 years, differing between Cycles. Work at Harvard University determined a 54-year Cycle in wheat prices in the UK, and studies in interest rates have found tops that occurred every 54 to 60 years. Most agreed, however, that the K-Wave is some 50 to 60 years in length.
Next is a look at the Highs and Los of the Kondratieff Wave. The beginning of the wave is counted from the Trough, (not the midpoint). The first Wave began with a Trough in 1790. The first Peak, (as described by economist Nathan Mager who defined the Peaks), came in 1814. The next Tough of 1844-51 began the second K-Wave. This Peaked in 1864. A third K-Wave began with a Trough in 1890-96. It Peaked in 1920. Most analysts viewed the Great Depression as the beginning of a fourth Kondratieff Wave. Economists at that time projected a major bottom of the K-Wave would come in the 1980s. That puts us in a fifth K-Wave now.
Figure #ma-2 shows the Kondratieff Wave from the 1790s to 2000:
Kalarhythms Composite & the Kondratieff Wave show interesting similarities when paired together. Kondratieff did not target the US economy specifically, he looked at Western economy overall, but all nations have Kalarhythms. The Cycle Composite for Kalarhythms of the United States begins with our nation's birth in 1775. This will be compared to the Highs and Lows of the K-Wave. Since the beginning of a K-Wave is marked by a Trough, the beginning of the Cycle Composite will also be considered at a Trough. Here is how they fare. A Cycle Composite for American Kalarhythms came to a Trough in 1800. This began the first Composite Wave that Peaked in 1817. The K-Wave Peaked in 1814. The next Trough in the Kalarhythm Composite came in 1850, 50 years after the first Composite Trough. A K-Wave Trough is figured at 1844-51. A Peak in the Composite came in 1865, one year after the K-Wave Peak in 1864. Beginning a third Composite Wave was a Trough in 1907. This later than the K-Wave Trough, but 57 years from the previous Composite Tough. Peak time for the Composite came in 1923, during the Roaring Twenties. Comparably, the K-Wave Peaked in 1920. It was around this time that Kondratieff published his observations, (1922 and 1925). A fourth Composite Wave began during the Great Depression with a Trough in 1939. The fourth K-Wave began during the Depression, which is a "short-Cycle" for a wave normally 50 to 60 years long. It was also a "short-Cycle" for the Composite. Another Peak for the Composite Cycle came in 1958 during the biggest economic expansion ever. A Composite Trough in 1988 began the fifth Composite Wave. Depression-era economists had predicted that a K-Wave Trough would come in the 1980s also. The Wave that we are in now in the midst of an upswing and should Peak in 2004.
Figure #ma-3 shows a Cycle Composite for Kalarhythms in the US & the Kondratieff Wave:
K-Waves and Composite Waves are without symmetry or periodicity, and their durations change between waves. Despite these oddities, both Waves have followed nearly synchronized motion for two centuries. It may be that they are two views of the same process. Kondratieff and other economists used the anecdotal evidence of western economies. The Cycle Composite for Kalarhythms uses the mathematics of dynamic and universal patterns. The results are similar.
The Kondratieff Wave may Not be a True Cycle, rather, it may be the Combined Effect of Many Cycles in Motion
A Composite Wave forecast can look at combined energies to come. After our most recent Trough in 1988, a Peak, is set for 2004. Another Trough in 2021 would start a sixth Composite Wave, due to Peak in 2036. A Trough in 2049 would start the seventh Wave, set to Peak in 2063. The eighth Wave could begin with a Trough in 2077 and Peak in 2092. Given the consistencies so far, these are reasonable probabilities.
Business as a Microcosm takes form when a company or any organization comes into being as a system. As a system, a business will assume a body, a heart, and a mind of its own. It manifests a fractal lens for energy. The Physical, Emotional and Intellectual energies of the Triad then flow through it. The business then become a mirror in the reflective dimensions of size and time to all the systems around it, and within it. Kalarhythms of the nation pulse through the fractal lens of a business and influence its operations. A business will respond with its own internal resources. This is the kaleidescope of change.
A single leaf on a tree acts as a separate processor of photosynthesis, then contibutes to the tree on which in subsists in a symboitic system. Despite the singulaity of a leaf, all leaves sprout and fall at the same time of year. A single American business may function with its own processes and internal rhythms, but it too moves within a symbiotic system, the United States. Despite the singularity of a business that has a life of its own, businesses of a like nature rise and fall with the seasons of change in America.
For example, the American Football League (AFL) was founded in 1959. This was to have a life of its own with a new fractal lens as a microcosm within the Physical, Emotional and Intellectual energies of the nation. Being a Physically-based organization linked to sports, it drew most of its energy from the Physical state of the nation. The Physical Cycle in the US, however, was Low and declining at the time. The AFL began playing in 1963, one year before a Physical Trough. This was an untimely confict. While the AFL was rising with its own phylogenic development to stretch its wings, the Physical Cycle of the nation was declining. Later in that Physical Low, in 1966, Football Commissioner Pete Rozelle would announce that the AFL would be absorbed by the National Football League (NFL) in a 1970 merger. The NFL itself was founded in 1920. It too began with a life of its own with a new fractal lens as a microcosm in the nation, with one big difference. The NFL sprouted as a new Physically-based organization when the Physical Cycle of the nation was High in the 1st Quarter of Precedents and Foundation. This was conducive to supplying the life sustaining energy that flowed through the fractal lens of this new entity. It survived and prospered. While a separate entity has its own internal structure, timing, fiscal years, and objectives, it works in context with the whole.
Cycle Basing in the Market is the influence of one Cycle or another in different aspects of the economy. The United States has a strong industrial base, which is Physical. While we also have strong Emotional and Intellectual bases, we often apply these energies toward Physical endeavors like production, commerce and physical sciences. Our Physical Cycle, therefore, can affect the economy more than the other two Cycles. Prosperity may be prevalent during a Physical High, if, for instance, the Emotional Cycle is Low. When only the Physical Cycle was High in 1950 and again in 1980, some business fared well and inner city construction boomed. When only the Emotional Cycle was High In 1932 and and again in 1992, we experienced a depression and a recession, respectively. The Physical Cycle is still not the only driving force in the economy. Far from it. Both the Emotional and the Intellectual Cycle play important roles. A combination of the three is the decisive force. In 1964, both the Emotional and Intellectual Cycles Peaked, while the Physical Cycle troughed. The economy boomed. In 1982 - 84, the Emotional and Intellectual Cycles troughed, respectively, and the Physical Cycle was High. The economy went into recessions. The subtlety is in understanding the balance and the confluence.
We have Physically-based, Emotionally-based, and Intellectually-based businesses that take turns leading the economy as Cycles change. Some stocks, certain industries, and segments of the economy may rise and fall on separate tides. The film industry, for instance, was about the only segment of the southern California economy that was not in recession in 1992. The Emotional Cycle was a driving force in entertainment and the only on High at the time. Film making became a steady source for jobs while the silicon valley and the general economy were hard hit. A historic case in point, the first telephone exchange began in 1878, and and Edison began his Electric Light Industry that same year. These were Intellectually-based industries that emerged in the 1870s, when only the Intellectual Cycle was High. Other parts of the economy were in a depression at that time, and the we had major railroad strikes as the Physical and Emotional Cycles were Low. That did not stop the progress in other areas and these two businesses that were soon to become world giants. This is the play of Cycles.
Our Three Cycles
move in different frequencies, each follows a pattern of Quarters
, occasionally hitting Crossovers
and we have a confluence developments that progress as Polyrhythms
. Then, when you identify a business as being based in one of the Cycles, and can give greater gravity to that Cycle while seeing it in a confluence of energies, then you can properly place that business in the Rhythms. This allows for more reliable forecasting than often results from trying to attribute change on trends that may be specifically relevant to that business. Following one business is like following one musician in a large orchestra. Hear the music of the orchestra, then hear the music of the one musician, know if that musician is in the timpani, the strings, or the Woodwind section, then understand the musician themself, then look ahead. Undertanding how Cycles work together to influence a business is like having a sheet music to the future. But remember, we sometimes have Abberations
that cause anomalies, but historically they have been short lived and we go back to the ever flowing pulse of Rhythms.