Bob Chernow Logo

The Long Wave Theory

My daughter likes to say that her dad, me, is probably the world’s leading authority on the Kondratieff Wave. “Fortunately for him,” she says, “no one is competing for the title.”

Nikolai Kondratieff was a Russian economist who believed that business cycles lasted for 55 to 60 years.

The Austrian economist, Joseph Schumpeter cited Kondratieff for the theory of “creative destruction.” This theory says that changes in technology as well as other innovations leads to the destruction of existing technology. Schumpeter cited Kondratieff whose writing were published in Austria in German.

An example of creative destruction is the introduction of cars and trucks that replaced horses.

Kondratieff was also the first economist to use actual statistics to bolster his theories. He used statistics from England, the US and France. Why did he not use stats from Italy or Germany? It is because they did not become countries until 1861 and 1871 and he needed to look back many decades.

His theory was that we have innovations that first need to be adopted. My two favorite examples are the cotton gin which separated cotton from seeds. Formerly slaves manually did this. The other innovation was the sewing machine which placed the thread at the point of the needle so that the thread could engage with the bobbin. Productivity increased not by 5 or 10%, but by many multiples in both cases.

The telegraph and telephone were major innovations, but have been replaced by the cell phone and the internet. We are witnessing this creative destruction now. It is part of our capitalist economy, but it occurs no matter what economic system is used.

Adoption of innovation takes time. The introduction of computers is an example as it took a generation or so to fully use these tools effectively.

Why do we not know more about Kondratieff? My guess is that he was lost in the purges in Russia and that 55 or 60 year time periods, even for a futurist, is too long to wait.

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

Sign up for email updates

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Skip to content