Cheer up! Better times are on the way

From Amazon

Introduction

The theory of long cycles - first identified by Nikolai Kondratiev and later refined by Joseph Schumpeter - proposes that capitalist economies undergo long waves of growth and renewal, spanning 40-60 years. 

These cycles are kicked off by periods of innovation, followed by economic expansion - but eventually stagnation and decline set in, as existing technologies mature and productivity gains dwindle.

The first Kondratiev wave, the Industrial Revolution (circa 1780–1830), introduced mechanised production in textiles, iron, and water power, catalysing industrial growth and urbanisation.

The Age of Steam and Railways (1830–1880) followed, marked by steam power and extensive rail networks, creating national markets and driving economic expansion.

The third wave, the Age of Steel, Electricity, and Heavy Engineering (1880–1930), brought advancements in steel, electricity, chemicals, and the internal combustion engine, fostering new industries like automotive and chemical manufacturing.

The Age of Oil, Automobiles, and Mass Production (1930–1970) then transformed society through petroleum-fueled growth, automobiles, and consumer-oriented mass production, ushering in widespread prosperity post-WWII.

Finally, the Information and Digital Age (1970–present) has redefined economies with computing, the internet, and digital communication, creating an interconnected, information-driven world.

Now, we are entering a sixth wave led by AI, biotech, robotics, and green energy.

Our current period of economic slowdown is, therefore, not an anomaly. We are living through the tail end of the fifth long wave, which began with the information and digital revolution of the 1970s and 1980s. Its initial explosive productivity has long gone, leaving us mired in the ensuing "Long Stagnation".

But that is about to change.

The Cycle of Disruption and Rebirth

Long cycles do not begin smoothly; they are born out of upheaval. 

Schumpeter referred to this as “creative destruction” - a period when old industries, ways of working, and social structures are uprooted to make way for new, more efficient ones. Historically, each new wave brings disruption that manifests as political resistance, temporary labour displacement, social restructuring, and financial volatility.

These challenges are not unique to the coming cycle; they were seen in all the major economic transformations. Steam power in the 19th century led to the mechanisation of labour and the rise of cities. More recently the spread of electricity and assembly lines in the early 20th century saw society adapt to large-scale industrialization - eventually bringing prosperity to unprecedented numbers of people.

Emerging Technologies Drive Growth

Technological advancements in AI, robotics, biotech, and sustainable energy are not merely incremental improvements - they represent transformative shifts:

• Artificial Intelligence will drive efficiency gains in manufacturing, logistics, healthcare, and finance.
• Biotechnology will transform personalised medicine, gene editing, and sustainable agriculture.
• Robotics and Automation will enhance pretty much every industry it touches.
• Sustainable Energy Technology, (renewables and energy storage) decouples growth from environmental degradation, improving the quality of life.

The Timeline for Prosperity

The initial, disruptive phase of this new cycle will advance to prosperity in roughly a decade as these technologies mature and integrate into the economy, creating dramatic efficiencies and driving growth.

During the early 2030s, expect accelerated adoption as infrastructure, expertise, and regulatory frameworks catch up.

This will culminate in a long period of stable growth in the 2040s, comparable to the post-WWII economic boom.

The Dawn of a New Cycle

The Long Stagnation has seen political volatility as cohorts of university educated young people have failed to achieve the futures their education appeared to promise them. Meanwhile, for most people, personal incomes have not advanced in decades, and the future looks bleak. No wonder they're cynical and angry.

Politically, the veto networks of established interests have conspired to block off hopes of change. Yet these new economic forces will not be forestalled. Through political turmoil new leaders and parties are unjamming the process.

How ironic if the self-styled Progressives are now the reactionary ones, wedded as they are to their static and lifeless equilibrium models which serve only to justify their privileges. Meanwhile the so-called Conservatives, riding the waves of change, are the real revolutionaries, the motors of progress going forward!