Recession 1983. Ten More Years To Go?

NOT FOR QUOTATION WITHOUT PERMISSION OF THE AUTHOR

RECESSION 1 9 8 3 .

TEN MORE YEARS TO GO?

C . M a r c h e t t i

W o r k i n g Papers a r e i n t e r i m r e p o r t s o n work o f t h e I n t e r n a t i o n a l I n s t i t u t e f o r A p p l i e d S y s t e m s A n a l y s i s a n d h a v e r e c e i v e d o n l y l i m i t e d r e v i e w . V i e w s o r o p i n i o n s e x p r e s s e d h e r e i n d o n o t n e c e s s a r i l y r e p r e - s e n t t h o s e o f t h e I n s t i t u t e o r o f i t s N a t i o n a l Member O r g a n i z a t i o n s .

INTERNATIONAL INSTITUTE FOR APPLIED SYSTEMS ANALYSIS A-2361 L a x e n b u r g , A u s t r i a

RECESSION 1933. TRT MORE PEARS TO GO?

That t h e p r e s e n t r e c e s s i o n is a r e a l l y s e r i o u s one, more and more people convene. That it has many a s p e c t s i n comon

w i t h t h e r e c e s s i o n a t the end of t h e 1 9 2 0 ' s , more and n o r e people p e r c e i v e . But on t h e q u a l i t y , s t r e n g t h and t i m e c h a r a c t e r i s t i c of t h e analogy t h e o p i n i o n s a r e d i s p e r s e d and t h e underlyinq

l o g i c i s weak. It is t h i s l o g i c I s h a l l t r y t o b u t t r e s s and c l a r i f y .

How does a r e c e s s i o n m a n i f e s t i t s e l f ? The f i r s t t a n g i b l e s i g n i s t h a t people s t a r t l o s i n g t h e i r jobs beyond t h e l e v e l of two o r t h r e e p e r c e n t of t h e work f o r c e . This l e v e l is considered p h y s i o l o g i c a l , and can be i n good p a r t a t t r i b u t e d t o t h e m o b i l i t y of t h e work f o r c e . B month gap between one job and t h e next makes a l r e a d y a t e n p e r c e n t f o r t h e y e a r f o r t h e person tinat noves.

I n t h e US twenty t o t h i r t y p e r c e n t of jobs a r e swapped each y e a r . To examine i n d e t a i l how people l o s e jobs is very r e v e a l i n q of t h e u n d e r l y i n g mechanism. I r e c e n t l y made a s t u d y of t h e

development of t h e c a r system d u r i n g t h i s c e n t u r y [Elarchetti 1 9 0 2 1 and I w i l l use it e x t e n s i v e l y t o i l l u s t r a t e t h e s i t u a t i o n . This i s n o t o n l y because t h e c a r has s o much weight i n western economies, b u t because many o t h e r p r o d u c t s and i n d u s t r i e s t h a t gave l i f t t o t h e boom of t h e 1 9 5 0 ' s and 1 9 6 0 ' s went through

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s a n e <evelop- ment and f i n d Lhemselves i n a s i m i l a r predicament now.

A c h a r a c t e r i s t i c i n conrmon t o my a n a l y s i s of economic and s o c i a l s t r u c t u r e s i s t h a t t h e y a r e based on q u a n t i t i e s and n o t on v a l u e . These q u a n t i t i e s are p h y s i c a l , such a s t h e rimer of o b j e c t s o r t o n s of c o a l ( i f e q u i v a l e n t ) . The mental image I u s e t o e x p l o r e t h e t i m e dynamics of these q u a n t i t i e s i s t h e D a m i n i a n c o m p e t i t i o n between s p e c i e s , and i t s mathematical c o u n t e r p a r t of V o l t e r r a ' s e c o l o g i c a l e q u a t i o n s . T h i s image is p e r f e c t l y

c a p t u r e d by H e r a k l i t ' s s t a t e m e n t t h a t c o m p e t i t i o n is the f a t h e r of e v e r y t h i n g , and t h e k i n g t o o . I n modern words it is t h e c r e a t i v e and r e g u l a t o r y f a r c e .

Coming back t o o u r c a r s I f o r m a l l y assumed t h e y were an animal s p e c i e s expanding i n v a r i o u s n i c h e s t e r r i t o r i a l l y coin- c i d i n g w i t h p o l i t i c a l e n t i t i e s , l i k e t h e U S o r France o r I t a l y .

The expansion o f a s p e c i e s i n a h a b i t a t , being b a c t e r i a o r f o x e s , is b e s t d e s c r i b e d by a l o g i s t i c equation and I o b v i o u s l y t r i e d that. The p r e c i s i o n o f t h e f i t with t h e h i s t o r i c a l d a t a i s unexpected. To g i v e a p r e c i s e example t h e d e v i a t i o n s from t h e f i t , f o r t h e c a r p o p u l a t i o n i n I t a l y over t w e n t y y e a r s , a r e less t h a n one p a r t p e r c e n t ( f i g u r e 7 ) .

These l o g i s t i c s have o n l y t h r e e p a r a m e t e r s , or t h r e e knobs t o t u r n i n o r d e r t o f i t them t o t h e d a t a . One f i x e s t h e p o s i t i o n i n time of t h e phenorena. The second g-ives t h e dynamics

of t h e p r o c e s s , and t h e t h i r d t h e s i z e of t h e n i c h e , t h a t i s t h e maximum number of animals t h a t t h e n i c h e can s u p p o r t . I f t h e q u a l i t y of t h e d a t a i s good, a s i n t h e c a s e of c a r p o p u l a t i o n s ,

i - e . t h e r e a r e no h i c c - ~ p s and u n c e r t a i n t i e s , t h e n t h e t h r e e par,meters can be d i r e c t l y c a l c u l a t e d from t h e d a t a w i t h o u t re- q u i r i n g h r t h e r e x t e r n a l i n f o m a t i o n .

The l a s t f a c t i s e x t r e m e l y i m p o r t a n t b e c a u s e i t p e r m i t s t h e c a l c u l a t i o n o f t h e f i n a l c a p a c i t y o f a c a r k e t i n t r i n s i c a l l y f r o m t h e d y n a m i c s o f i t s p e n e t r a t i o n . And i t c u t s t h e G o r d i a n k n o t o f

c o n g e s t e d e c o n o m e t r i c h y p o t h e s e s , where t h e r e s u l t u s u a l l y d e p e n d s on t h e i n v e s t i g a t o r s ' o p i n i o n s , o r more o f t e n o n t h o s e o f t h e

s p o n s o r . I t h a s , h o w e v e r , t h e d i s t u r b i n g c h a r a c t e r i s t i c o f n o t g i v i n g e x p l a n a t i o n s , i f f a l s e . I t i s l i k e c a l c u l a t i n g a t r a j e c t o r y o f a p r o j e c t i l e , f r o m a l i m i t e d s t r e t c h o f i t , w i t h o u t knowing a n y t h i n g a b o u t g u n s , powders a n d t h e h i d d e n n o t i v e s o f t h e gun- man. The j u s t i f i c a t i o n o f t h e u s e o f s u c h t e c h n i q u e i s t h a t it

a p p l i e s t o a l l s o r t o f b a l l i s t i c t r a j e c t o r i e s . W e h a v e i n f a c t a p o r t f o l i o o f a b o u t f o u r h u n d r e d c a s e s o f economic a n d s o c i a l b e h a v i o r a n a l y z e d i n t h i s way.

I n t h e case o f t h e c a r a s a t u r a t i o n l e v e l c a n t h e n be a s c r i b e d t o e a c h n a t i o n , w h i c h c u r i o u s l ~ i s n o t Z i r e c t l y r e l a t e ? t o

p o p u l a t i o n o r w e a l t h o r area o r l e n g t h o f r o a d s . 2 c o n o p . i ~ m o d e l e r s may n o t l i k e i t , b u t I c a n ' t h e l p i t . !?econ?, a n d z o r s

d i s t u r b i n g , i t a p p e a r s t h a t most o f t h e w e s t e r n c o u n t r i e s ' mar- k e t s a r e p r a c t i c a l l y s a t u r a t e d . T h i s i s shown i n F i g u r e 2 ,

w h e r e t h e p e n e t r a t i o n c u r v e s a r e r e p o r t e d f o r s i x c o u n t r i e s . F o r g r a p h i c a l r e a s o n s t h e o r d i n a t e s h a v e beenchossn t o n a k e t h e n

a p p e a r as s t r a i g h t l i n e s , i n s t e a d o f S - c u r v e s a s i n F i g u r e 1 . Now what h a p p e n s when a n i n d u s t r y a s a whole f i n d s t h a t t h e m a r k e t i s s a t u r a t e d . F i r s t , i t w i l l n o t i c e t h a t it h a s e x c e s s c a p a c i t y , b e c a u s e e v e r y b o d y i n t h e t r a d e o p e r a t e s i n t h e b u s i n e s s a s u s u a l c o n f i g u r a t i o n , e x p e c t i n g e x p a n s i o n t o c o n t i n u e f o r e v e r , o r a t l e a s t up t o t h e t i m e o f h i s r e t i r e m e n t . To s t a r t w i t h , t h e c a p i t a l b u r d e n w i l l i n c r e a s e i t s w e i g h t .

Second, p r o d u c t i o n w i l l go i n t o s a t i s f y i n g r e p l a c e m e n t de- mand, which i s b a s i c a l l y a f i x e d demand. Tampering w i t h t h e

l i f e o f t h e p r o d u c t may change somehow t h i s level., b u t f l e x i b i l i t y i s l i m i t e d and t h e f e e d b a c k i s slow.

A f i x e d demand would n o t be s o bad i f o v e r c a p a c i t y were n o t p r e s e n t , and i f t h e dynamic of s a l a r i e s would n o t push t o t a l c o s t s up. The o n l y s h o r t - t e r m s o l u t i o n i s t o i n c r e a s e p r o d u c t - i v i t y , which i s i n any c a s e p a r t o f t h e i n t e r n a l dynamics o f

t h e company. But i n c r e a s e d p r o d u c t i v i t y w i t h c o n s t a n t p r o d u c t i o n means s h e d d i n g j o b s . The c a r o v l t c u t c f F i a t coulc? b e k e p t t h e same a f t e r s a c k i n g s e v e n t y thousand p e o p l e o u t o f a work f o r c e i n t h e c a r a r e a of p e r h a p s two hundred t h o u s a n d .

The r e a l l y c u r i o u s f a c t a b o u t market s a t u r a t i o n i s t h a t i t comes p r a c t i c a l l y a t t h e same t i m e a l l o v e r t h e w o r l d , i n s p i t e of t h e f a c t t h a t t h e c a r e n t e r e d i n v a r i o u s a r e a s i n a v e r y s p a r s e o r d e r . But l a t e c o n e r s ~ . c v e d f a s t e r t o t h e p o i n t o f o v e r c o m p e n s a t i n g a s i n t h e c a s e of J a p a n . There i s i n f a c t a p r e c i s e r e l a t i o n s h i p between t h e s t a r t i n g d a t e o f t h e m a s s i v e p e n e t r a t i o n o f c a r s i n a c e r t a i n g e o g r a p h i c a l a r e a , and t h e r a t e of s u c c e s s i v e p e n e t r a t i o n , a s shown i n F i g u r e 3 .

The f a c t t h a t t h e world r a r k e t s s a t u r a t e a t t h e s a c e t i z e c e a n s t h a t t h e u s u a l v a l v e o f e x p o r t i n g t o compensate s l u g g i s h i n t e r n a l m a r k e t s , d o e s n o t work any more. O r i t works t h e o t h e r way,

b e c a u s e c o m p e t i t i o n h e a t s up j u s t a t t h e i n t e r n a t i o n a l market w i t h d i r e c o n s e q u e n c e s f o r t h e o l d and e s t a b l i s h e d e n t e r p r i s e s .

I f w e look a t d e t a i l s , i n o r d e r t o s l a s h c o s t s one h a s t o show t h e utmost f l e x i b i l i t y a t t h e l e v e l o f e n g i n e e r i n g , l a b o r and management. I n an o l d e s t a b l i s h e d company, l e t ' s c a l l it G11, e n g i n e e r s t e n d t o b e o l d i s h and r a n k e d , l a b o r r i g i d and g r e e d y ,

management e x h a u s t e d by t h e g r a t i f i c a t i o n of o b t a i n i n g s o much w i t h s o l i t t l e swimming,when r i d i n g t h e wave of t h e boom. The young company, l e t ' s c a l l it T o y o t a , s t i l l has young and ex- p e r i e n c e d e n g i n e e r s , no l a b o r problem a s i t s t i l l e x p a n d s , and a management f u l l y t e r r o r i z e d by t h e s a t u r a t i o n of t h e l o c a l market t h a t it sees coming under h i s e y e s . You name t h e w i n n e r . I n s p i t e o f a l l i n s t i t u t i o n a l b a r r i e r s t h e l o s e r s w i l l e r e c t , my Darwinian f o r e c a s t a t t r i b u t e s t o J a p a n h a l f t h e c a r s produced i n t h e world i n t h e y e a r 1995.

The a u t o m o t i v e i n d u s t r y pumps t h r o u g h t h e v e s t e r n econorny an amount o f money t h a t c l a s s e s i n t o t h e t r s l l i o n o F : ' o l l a r s p e r y e a r , I t i s c l e a r t h a t i t s h i c c u p s w i l l shake t h e whole bady. But i f i t were t h e cmly b-2.ustq in shmbles, t h e problem c o u l d be f a c e d . Reabsorbing a m i l l i o n o r two workers and employees i s p e a n u t s f o r economies occupying a hundred times a s many. The r e a l prob- lem i s t h a t i f w e look e . g . a t t h e whole spectrum o f e l e c t r i c a p p l i a n c e s , t h e s i t u a t i o n i s e x a c t l y t h e same. Going a l i t t l e beyond what I have a l r e a d y proven i n d e t a i l , I would say t h a t a l l t h e i n d u s t r i e s t h a t t o g e t h e r f e d t h e boom of t h e 1 9 5 0 ' s and

1 9 6 0 ' s now f a c e s a t u r a t e d m a r k e t s and o v e r c a p a c i t y , w i t h t h e con- s e q u e n t need t o shed p e r s o n n e l . The wave t h e n s ~ r e a d s , downward t o t h e t r a n s p o r t a t i o n and d i s t r i b u t i o n s e c t o r s , upwar6 t o t h e procurement and i n v e s t m e n t . Companies w i t h problems and p e o p l e o u t of work w i l l become c a u t i o u s s p e n l e r s and l i m i t t h e i r pur- c h a s e o f s e r v i c e s . The wave s p r e a d s h e r e t o o ; I c o u l d c i t e t h e a i r l i n e s moving t o g e t h e r i n t o b a n k r u p t y worldwide, n a t u r a l l y o v e r - equipped and o v e r s t a f f e d . They a r e s t a r t i n g t o she?. ? e r s o n n e l t c o .

I t h i n k t h e p i c t u r e i s c l e a r enough f o r o u r n e e d s , i . e . t o go t o t h e n e x t s t e p of t h e w h y ' s , how's and w h e n ' s . Tay do s o many

i n d u s t r i e s s a t u r a t e t h e market a t t h e same t i m e , how can we g e t o u t o f t h e doldrums, and when w i l l t h e v i t a l t r a d e winds

a g a i n ? The p r o b l e m o f a l a r g e r e c e s s i o n l i k e t h e one i n t h e 133'3's were v i s i b l e enough t o s t i m u l a t e much t h e o r e t i c a l work, f o r e m o s t t h a t o f Schumpeter, i n t o whose m i l l my w a t e r s w i l l f l o w . The f a c t t h a t t h e r e a r e a h o s t of t h e o r i e s i m p l i e s t h a t t h e mecha- nisms a r e b a s i c a l l y n o t u n d e r s t o o d . To h e l p u n d e r s t a n d i n g I w i l l u s e

t h e r e s u l t s of system s t u d i e s which I d i d f o r c o m p l e t e l y d i f f e r e n t p u r p o s e s , l i k e t h e c a r s t u d y which was o r i g i n a l l y meant t o a n a l y z e

t h e i n t r i g s i c dynbnic of t h e s p r e a e of an i n n o v a t i o n p e r s e , enucleated from i t s economic impact. The c u r i o u s r e s u l t i s t h a t

a t g l o b a l l e v e l t h e t i m e f o r a b a s i c i n n o v a t i o n t o go from 1 0 p e r c e n t t o 9 0 p e r c e n t of t h e a v a i l a b l e market i s u s u a l l y f i f t y y e a r s , whether

t h e i n n o v a t i o n i s m a r g a r i n e , vacuum c l e a n e r s , o r t h e t h e o r y of r e l a t i v i t y .

I am p r e t t y c o n v i n c e d , a l t h o u g h t h e f u l l d e m o n s t r a t i o n s t i l l r e q u i r e s t h a t I s h u f f l e a heap of s t a t i s t i c s , t h a t t h i s i s l i n k e d t o b a s i c human b e h a v i o r , which seems t o show an extreme s t a b i l i t y a t l e a s t f o r t h e l a s t 3 0 0 y e a r s I plowed f o r t h and Sack.

A b r i l l i a n t d e m o n s t r a t i o n of t h i s s t a b i l i t y i s g i v e n i n F i g u r e 4 , where market p e n e t r a t i o n o f p r i m a r y e n e r g i e s a t world l e v e l i s r e p o r t e d . I n c i d e n t a l l y , t h e time c o n s t a n t h e r e i s 1 0 0 y e a r s , b u t t h e p o i n t I am a i m i n g a t i s t h a t t h e r a t e of p e n e t r a t i o n , e x p r e s s e d i n t h e p r o p e r p a r a m e t e r i n the e q u a t i o n , s t a y s c o n s t a n t t o w i t h i n a

f r a c t i o n of one p e r c e n t o v e r t h e whole r e c o r d .

Now, if many i n d u s t r i e s happen t o doldrum t o g e t h e r , w i t h

s i m i l a r t i m e c o n s t a n t s u n d e r l y i n g , t h i s z e a n s t h e y a r e 5 o r n c o r e o r l e s s t o g e t h e r , and t h e q u e s t i o n i s why. Here comes t o h e l p a

system s t u d y o f i n v e n t i o n and i n n o v a t i o n d u r i n g t h e l a s t t h r e e cen- t u r i e s i n t h e w e s t e r n w o r l d , which I made w i t h a n o t h e r purTose

i n mind, t h a t of b e i n g a b l e t o p r e d i c t when a new s o u r c e o f e n e r g y i s a c c e p t e d i n t o t h e game [ M a r c h e t t i 1 9 8 1 1 .

The f i n a l r e s u l t o f t h e s t u d y i s r e p o r t e d i n F i g u r e 5 where t h e c o u p l e of l i n e s r e p r e s e n t i n v e n t i o n waves and i n n o v a t i o n waves, r e s p e c t i v e l y . The i n v e n t i o n wave d e s c r i b e s t h e c o n c e p t i o n o f new p r o d u c t s ( p r o t o t y p e s ) , whose s u c c e s s w i l l be s a n c t i o n e d by t h e s t a r t of a new i n d u s t r y ( i n n o v a t i o n ) . The lines t h a e l v e s r e p r e s e n t t h e c u m u l z t i v e number of i n v e n t i o n s ( o r i n n o v a t i o n s ) a t a c e r t a i n d a t e ,

e x p r e s s e d a s a p e r c e n t a g e o f t h e t o t a l num-her i n t h e wave. The c u r i o u s f a c t h e r e i s t h a t f o r m a l l y t h e sets of i n n o v a t i o n s grew a s i f t h e y were a p o p u l a t i o n f i l l i n g a n empty e c o l o g i c a l n i c h e , t h a t of t h e need of i n n o v a t i o n s by t h e " s y s t e m " j u s t t o c o n t i n u e t h e a n a l o g y .

The q u e s t i o n now a r i s e s what g e n e r a t e s t h e empty n i c h e . Simple: a former p o p u l a t i o n d y i n g . I f t h e m e n t a l n o d e l h o l d s , t h e n t h e i n n o v a t i o n waves s h o u l d be s e p a r a t e d by a b o u t 50 y e a r s . They a r e . I n f a c t , t h e d i s t a n c e between t h e i r c e n t e r p o i n t s , when h a l f of t h e i n n o v a t i o n s i n t h e waves have Seen made, i s pre- c i s e l y 54 y e a r s .

Now a p i c t u r e s t a r t s emerging: d y i n q i n d u s t r i e s c r e a t e t h e vacuum, t h e n i c h e , where t h e new s p e c i e s , t h e new i n n o v a t i o n s ,

r u s h i n . The s p a c i n g between r u s h e s i s d i c t a t e d by t h e t i m e o f market s a t u r a t i o n o f t h e v a r i o u s i n d u s t r i e s , t h a t i s t h e f i n a l consumer b e h a v i o r , which p u t s t h a t t i n e i n t h e 50 y e a r s b r a c k e t . Because t h e same t i m e h a s been n e c e s s a r y t o mesh i n t o t h e d a i l y r o u t i n e of t h e p h y s i c i s t a b a s i c i n n o v a t i o n l i k e t h e g e n e r a l r e l a - t i v i t y t h e o r y , I p r o p o s e t o g i v e t h i s t i m e a n a n t h r o p o l o g i c a l s i g n i f i c a n c e

.

The i n t e r n a l dynamic of each of t h e r u s h e s on t h e c o n t r a r y c h a n g e s , i n t h e s e n s e of a c c e l e r a t i n g , p r a c t i c a l l y d o u b l i n g s p e e d e v e r y c e n t u r y . ^I have n o t found a c l u e t o t h i s v e r y r e g u l a r

a c c e l e r a t i o n n o r f o r t h a t of c a r p e n e t r a t i o n , where t h e time t o p e n e t r a t e s u c c e s s i v e m a r k e t s d e c r e a s e s e x p o n e n t i a l l y w i t h t h e t i m e o f i n t r o d u c t i o n . The same phenomenon o c c u r s w i t h s t e e l f o r t h e c o u n t r i e s which i n s u c c e s s i o n t o o k t h e l e a d e r s h i p i n s t e e l p r o d u c t i o n , from t h e 1 6 t h c e n t u r y on: F r a n c e , Germany, B r i t a i n , the U S , t h e USSR ( f o r a s h o r t s t r e t c h ) , and soon J a p a n .

The p r e s e n t i n n o v a t i o n r u s h w i l l f o r m a l l y s t a r t i n 19e4 w i t h

1 0 p e r c e n t of t h e b a s i c i n n o v a t i o n s i n t r o d u c e d and end i n 2 0 0 2 w i t h 90 p e r c e n t of t h e b a s i c i n n o v a t i o n s i n t r o d u c e d . These inno- v a t i o n s a r e t h e s e e d s o f t h e n e x t boom t h a t w i l l s t a r t when the i n d u s t r i e s t h e y s t a r t e d w i l l be l a r g e enough t o i n f l u e n c e t h e whole economy. But l e t ' s l o o k now n o r e i n d e t a i l a t t h e t i m i n g .

The 5 4 y e a r s which s o s t e a d i l y h o l d f o r s u c h a l o n g t i m e , a r e an o b v i o u s r e m i n d e r o f t h e K o n d r a t i e f f c y c l e s . ^I r e a 2 a g a i n h i s b r i l l i a n t p a p e r s [ K o n d r a t i e f f 1926, 1 9 2 8 1 , and I s h o u l d s a y t h a t n o t nuch h a s been s a i d a f t e r him t h a t he h i m s e l f d i d n o t s a y . Ee' i s by t h e way the t i p of t h e i c e b e r g a s t h e s t u d y of economic

c y c l e s w a s w e l l d e v e l o p e d a t t h e b e q i n n i n g of t h e c e n t u r y [Kautsky 19011 and t h e i r p o l i t i c a l i m p l i c a t i o n s were w e l l a p p r e c i a t e d by m l i k e T r o t z k y [I9231 and Lenin. The i n e v i t a b i l i t y of t h e down-

f a l l p r o c e s s a l s o i r r i t a t e d t h e c a p i t a l i s t i c e c o n o m i s t s , who r e - s e n t e d b e i n g t o l d t h e y c a n n o t t u r n knobs t o r e g u l a t e t h e economy, and t h e i r e x p e n s i v e a d v i c e i s n o t r e a l l y worth t h e c a n d l e .

I r e a c h e d many of t h e c o n c l u s i o n s K o n d r a t i e f f had guessed f o l l o w i n g my c o m p l e t e l y d i f f e r e n t l i n e of t h o u g h t and p r o f i t i n g

from t h e e x t r a c y c l e t h a t came i n between. The s i t u a t i o n seems t o me now s o c l e a r c o n c e p t u a l l y and q u a n t i t a t i v e l y s o w e l l mapped a s t o be beyond d o u b t .

K o n d r a t i e f f was f o u g h t by most, and t h e arguments were usu- a l l y based on e c o n o m e t r i c a n a l y s e s t e n d i n g t o d i s p r o v e what he s a i d because t h e s e c y c l e s , l i k e t h e Loch N e s s m o n s t e r , c o u l d a p p e a r o r d i s a p p e a r depending on who was making t h e a n a l y s i s . Having t o d e a l , i f i n d i r e c t l y , w i t h economic m a t t e r s , I always s k i p p e d money a s a n economic i n d i c a t o r b e c a u s e of i t s n o b i l i t y and a m b i g u i t y , t r y i n g i n s t e a d t o map t h e p r o c e s s e s t h r o u g h t h e i r p h y s i c a l m a n i f e s t a t i o n s . I n e v e r r e g r e t t e d t h i s c h o i c e . To g i v e an e x a n p l e , what a b o u t t a k i n g t h e p u l s e of t h e economy i n p h y s i c a l t e r m s , by measuring i t s demand f o r e n e r g y ? The a n a l y s i s made by H.B. S t e w a r t of NUTEVCO f o r t h e U S i s r e p o r t e d i n F i g u r e 6 where t h e r e s i d u a l s of primary energy and e l e c t r i c i t y consumption, w i t h r e s p e c t t o a l o g i s t i c b e s t f i t , a r e g i v e n a s p e r c e n t a g e d e v i a t i o n s . This m e t a b o l i c map i s i n my o p i n i o n t h e b e s t o b j e c t i v e measure of what i s g o i n g o n , and t h e s y n c h r o n i z a t i o n o f many d i f f e r e n t f e a t u r e s i s v e r y s t r i k i n g , a s shown i n F i g u r e 7 .

To t a k e o n l y one example, i f we look a t t h e upper p a r t of t h e f i g u r e , energy p r i c e s a p p e a r b a s i c a l l y c o n s t a n t i n c o n s t a n t money w i t h f l a r e s e v e r y 5 4 y e a r s . These f l a r e s always o c c u r i n c o i n c i d e n c e w i t h t h e peaks of t h e s i n u s o i d c u r v e which b a s i c a l l y mark t h e end o f t h e boom p e r i o d s . The mechanisms of t h e r i s e a r e o b v i o u s l y d i f f e r e n t f o r e a c h c a s e and t h e how's a r e t e n d e n t i a l l y s o l d f o r t h e why's. I t seems t o m e i n s t e a d t h a t a g i v e n market c o n f i g u r a t i o n , which r e p e a t s i t s e l f p e r i o d i c a l l y , l e a v e s t h e upper hand t o t h e s e l l e r s , who i n e v i t a b l y t a k e a d v a n t a g e . I n o t h e r words, t h e why's a r e m a c r o c o n t e x t u a l , s h e i k s and K i s s i n g e r s

o n l y p a r t o f t h e c h r o n i c l e s . Because t h e peaks have a l i m i t e d w i d t h , a b o u t 10 y e a r s , e n e r g y p r i c e s s h o u l d f a l l s h o r t l y t o

s e c u l a r l e v e l s . L e t ' s s a y a p p r o x i m a t e l y 12 US-$/bbl ( 1 9 8 2 - 5 ) . Another o b s e r v a t i o n i s t h a t a new p r i m a r y e n e r g y s o u z c e i s i n t r o d u c e d a t t h e s t a r t o f e a c h wave. F o r t h e wave coming i n t h e near f u t u r e w e have n u c l e a r e n e r g y . For t h e n e x t o n e , i n 2025, w e ' l l p r o b a b l y have f u s i o n . T h i s c u t s t h e l e g s t o a l l s o r t s o f a l t e r n a t i v e s , f o r c o n t e x t u a l r e a s o n s which s t i l l have t o be ex- p l o r e d i n t h e i r d e t a i l e d mechanisms. P e o p l e i n a l t e r n a t i v e b u s i - n e s s a l r e a d y know by d i r e c t t e s t i n g t h a t t h e y t o o k a wrong t r a c k . Was t h i s Lzme_?se w a s t e a v o i Z a b l e i f we had had a l i t t l e n o r e i n -

s i g h t i n t o t h e workinc o f t h e system?

F i n a n c i a l m a c r o - c o l l a p s e s s y s t e m a t i c a l l y o c c u r when t h e s i c u - s o i d c u r v e c r o s s e s t h e z e r o l e v e l , when t h e s ~ e e d o f f a l l i s maxi- nun. The l a s t c r o c s was 1 9 2 9 , and t h e f o l l o w i n g one 1993. C r o s s - i n g f i n g e r s , c r a c k i n g sounds a r e h e a r d a l l o v e r t h e p l a c e .

-

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c u r v e w i l l s t a r t r i s i n g a g a i n o n l v i n t h e 1 9 9 0 ' s .

These r e s u l t s , m o s t l y d i s p l a y e d i n F i g u r e 7 , g i v e u s a f r e s h and q u a n t i t a t i v e i n s i g h t i n t o t h e c y c l i c p r o c e s s e s o f economic a c t i v i t y , and can be used t o a s s e s s t h e v a l u e of what i s b e i n g done t o handle the c o n s e q u e n c e s , and t h e p o t e n t i a l o f what c o u l d be done.

The b a s i c c a u s e o f c o n j u n c t i o n a l weakness, a s w e saw, i s s a t u r a t i o n o f t h e m a r k e t s . Can w e manage t h a t ? L e t ' s t a k e t h e c a s e o f t h e c a r t o be more s p e c i f i c . The q u e s t i o n t h e n b o i l s down t o inducing p p l e t o p o s s e s s more c a r s t h a n t h e y have. A p a r t from t h e f a c t t h a t t h i s - would o n l y d i s p l a c e t h e problem by a few y e a r s , I am convinced t h e r e i s a c o n f i g u r a t i o n a l maximum, _{t h e} i n t e r n a l l o g i c of which s t a r t s t o be u n v e i l e d [Zahavi 1 9 8 11

.

The f i r s t t h i n g governments a r e c a l l e d on t o do d u r i n g a r e c e s s i o n i s t o h e l p r e v i v e t h e show. T h i s i s u s u a l l y done by d e f i c i t s p e n d i n g . The i n t e l l e c t u a l c r e d i t i s u s u a l l y g i v e n t o Reynes, b u t i t i s s u c h a n a t u r a l t h i n g t o 20 when s o many a r e a s k i n g . D e f i c i t s p e n d i n g means t h a t t h e s t a t e t a k e s money from p e o p l e who s a v e d it f o r l a c k o f s p e n d i n g i m a g i n a t i o n t o g i v e it a r o u n d i n t h e hope somebody e l s e h a s g o t t h i s i m a g i n a t i o n . T h i s money w i l l n e v e r come b a c k , i t i s w e l l known. One o f t h e b e s t governments i n t h e w o r l d i n f i n a n c i a l m a t t e r s , t h a t of t h e US, l a s t gave back t h e p r i n c i p a l i n 1 8 3 3 . One of t h e w o r s t , i n f i n a n c i a l m a t t e r s , t h e I t a l i a n , h a s a l r e a d y s p e n t i n d e f i c i t a b o u t 7 0 p e r c e n t of a l l a v a i l a b l e c r e d i t i n t h e n a t i o n .

There would be n o t h i n g wrong w i t h d e f i c i t s p e n d i n g i f it were n o t f o r two f a c t s : t h e p r o c e s s i s s e l f - p r i m i n g and t h e r e c e s s i o n i s t o o long. I n o t h e r words, t h e m e d i c i n e w i l l f i n i s h l o n g b e f o r e t h e p a t i e n t i s h e a l t h y a g a i n . It i s 1 0 0 p e r c e n t c l e a r t h a t I t a l y c a n n o t o p e r a t e t h e n e x t t e n y e a r s a s i t d i d f o r t h e l a s t t e n , b u t t h e US may r e a c h a s i m i l a r p o s i t i o n o n l y f i v e y e a r s from now.

And t h e y e a r s t o go a r e a t l e a s t t e n .

F u r t h e r m o r e , a s I s a i d , t h e s a t u r a t i o n p o i n t s f o r t h e v a r i o u s m a r k e t s most p r o b a b l y c a n n o t be d i s p l a c e d s p r i n k l i n g t h e s y s t e m w i t h money, s o t h e p r o c e s s d o e s n ' t work even s h o r t - t e r m .

The f a c t t h a t s o much money i s a v a i l a b l e f o r d u b i o u s c u s t o m e r s l i k e t h e s t a t e s , r a i s e s t h e q u e s t i o n of why s o much money was a v a i l -

~ l f o r d u b i o u s c u s t c ~ e r s e i n ~ e n e r a l . E. rough e s t i ~ a . t e is t h a t a t r i l l i o n d o l l a r s of i n t e r n a t i o n a l l o a n s w i l l n e v e r come home. Double t h a t f i g u r e f o r i n t e r n a l d e b t s . The s i m p l e s t e x p l a n a t i o n i s t h a t i n a phase of boom t h i s money would have gone t o L4EG o r GN, j u s t t o d r o p names, b u t w i t h mark,ets s a t u r a t i n g , i n d u s t r i e s d i d n o t r e a l l y

need c a p i t a l , s o i t v e n t t o c u s t c z e r s a h l e t o promise h i g h i n t e r - e s t r a t e s , if w i t h i n ~ r o S a 5 l e c o l l a t e r a l .

These l o a n s c a n a l s o be s e e n a s a form o f d e f i c i t s p e n d i n g . Because t h e m a r k e t s were s a t u r a t i n g a t home, d e v e l o p i n g c o u n t r i e s were g i v e n t h e money t o buy goods ( u n s a l e a b l e ) t o f a c e - l i f t w i t h p r o p e r b u s i n e s s f o r m a l i s m an a c t u a l give-away M a r s h a l l p l a n s t y l e . T h i s mega-lie w i l l f i n a l l y s t r i k e back d e s t r u c t i v e l y on t h e w o r l 2 3 a n k i n g s y s t e m when t h e c i r c u l a r g u a r a n t e e s gme w i i l no l o n g e r be a b l e t o h o l d a minimum of: c r e d i b i l i t y .

What I f e a r most i n t h e p r o c e s s i s s o c i a l u n r e s t stemming from

1

t h e breakdown o f t h e e e c h a n i s n k e e p i n g . . n i l l i o n s o f p e o p l e a l i v e

1

when t h e y a r e n o t really a c a r t of the p r o d u c t i v e s y s t e m any R o r e . Another form o f give-away i s t o enhance t h e p r o d u c t i o n o f a r m s , o b j e c t s t o b e d e s t r o y e d , and'lsorrY70 d e s t r o y . Also i n t h i s a r e a t h e t e m p t a t i o n i s s t r o n g , and t h e p r e s s u r e s from t h e i n d u s t r i a l

j u s t i d e a l a s i t n e v e r s a t u r a t e s . I f one compounds t o t h a t t h e

I

p o l i t i c a l n e c e s s i t y o f l o o s e n i n g t h e Gordian k n o t s of s o c i a l d i s - ^I _I s a t i s f a c t i o n and t h e r e a d i n e s s t o r e c h e c k i n a v i o l e n t way t h e

i n t e r n a t i o n a l p e c k i n g o r d e r , t h e s i t u a t i o n becomes s c a r y . The s h a l l o w s (and p e a k s ) i n F i g u r e 7 have been t i n e o f i n t e r n a t i o n a l a g g r e s s i v i t y , c u l m i n a t i n g , f o r example, i n World War 11, j u s t t o - ward t h e end of t h e p r e v i o u s r e c e s s i o n ( b e t t e r Z e p r e s s i o n ) p e r i o d . A war i n t h e m i d d l e 1 9 9 0 ' s i s something w e s h o u l d c e r t a i n l y f i n d a way t o a v o i d .

A n a t u r a l q u e s t i o n a t t h i s p o i n t i s how t h e i n s i g h t t h a t ttle a n a l y s i s gave u s i n t o t h e mechanisms o f t h e r e c e s s i o n may be used t o r a t i o n a l i z e t h e patch-up i n o r d e r t o r e a c h t h e n e x t boom w i t h a minimum of damage. One p o i n t i s v e r y c l e a r i n t h e

a n a l y s i s : t h a t t h e p r o c e s s c o n s i s t s of a t r a n s f e r of t a s k s and s k i l l s from a c l a s s of a c t i v i t i e s i n phase-out c o n f i g u r a t i o n t o one i n phase-in. The keyword of t h i s t r a n s i t i o n phase s h o u l d t h e n be f l e x i b i l i t y and a s a p t a b i l i t y

.

T h i s b r e a k s down i n t o a h o s t of p o s s i b l e i n i t i a t i v e s . I n s t e a d of g i v i n g money (from banks o r s t a t e ) t o e . g . a i l i n g c a r i n d u s t r i e s ,

l i k e Chrys2er p a y i n g p e o p l e t o s t a y on a s i n k i n g s h i p , i t would be much w i s e r t o g i v e t h e money t o t h e employees t!!emselves t o h e l p them r e s e t t l e and p e r h a p s s t a r t t h e i r own l i t t l e b u s i n e s s . The f i r s t p r o c e d u r e c a n be s e e n a s a f r e e z e , t h e second a s a f l u i d i f i c a t i o n . Through such a p r o c e d u r e , e . g . O l i v e t t i - - o n c e a monoculture i n t h e I v r e a a r e a i n I t a l y - - h a s s e e d e d a h o s t of s m a l l e n t r e p r i s e s , v e r y a c t i v e and v e r y u s e f u l , due t o t h e i r extreme f l e x i b i l i t y , f o r s u p p o r t i n g s t i l l newer i n i t i a t i v e s . The c l e v e r J a p a n e s e f o l l o w t h i s second p o l i c y .

During t h e r e c e s s i o n of t h e t h i r t i e s t h e keyword f o r s t a t e i n t e r v e t i o n w a s p u b l i c works. C e r t a i n l y , d u r i n g t h e h e c t i c y e a r s o f t h e booms much p u b l i c i s n e g l e c t e d i n f a v o r o f p r i v a t e , s o t h e r e i s no l a c k of o b j e c t i v e s . They have t o be c h o s e n f o r t h e i r l a s t i n g v a l u e , however. I n Germany, c o n s t r u c t i o n o f a u t o r o u t e s g o t t h e l i m e l i g h t i n t h e t h i r t i e s . Europe i s now q u i t e w e l l s e r v e d w i t h a u t o r o u t e s , and a s my s t u d y on c a r s shows, t h e c a r p o p u l a t i o n i s n o t l i k e l y t o grow i n t h e n e x t twenty y e a r s . B u i l d i n g a u t o - r o u t e s on t h e g r a n d s c a l e c o u l d be j u s t a p i t f a l l nowadays.

To make s u g g e s t i o n s on t h e c o n s t r u c t i v e s i d e , c i t i e s grew and developed a t a h e c t i c pace d u r i n g t h e l a s t t h i r t y y e a r s , and t h e y t e n d t o be messy beyond d e s c r i p t i o n . Reoptimizing them a t t h e measure of man, and improving t h e i r comfort and a e s t e t i c s i s p r o b a b l y one of t h e most f r u i t f u l t a s k s t h e p u b l i c c a n d e v o t e i t -

s e l f t h i s t i m e . Beauty r e l e a s e s stresses and d e f u s e s a g g r e s s i v i t y . The growth w i l l c o n t i n u e . World p o p u l a t i o n i s c o l l a p s i n g i n t o t h e c i t i e s . A second l o o k a t underground t r a n s p o r t a t i o n may open a n a r e a f o r v a s t , l o n g , and e x p e n s i v e i n f r a s t r u c t u r e i n v e s t m e n t s .

Coming t o i n d u s t r i a l t a s k s , a s F i g u r e 4 shows, e n e r g y s y s t e m s l i v e t h r o u g h two c y c l e s . W e know t h a t n a t u r a l g a s and n u c l e a r a r e t h e s t a p l e f o r t h e n e x t f i f t y y e a r s . N a t u r a l g a s i s expanding a t maximum r a t e now, i n a b s o l u t e t e r m s , and r e q u i r e s v i g o r o u s ex- p a n s i o n o f t h e i n f r a s t r u c t u r e , from f i e l d s t o f i n a l consumer.

I n s t e a d of p a t c h w o r k i n g on i t f o l l o w i n g i n s t a n t demand, t h e i n f r a s t r u c t u r e c o u l d be c o n s t r u c t e d w i t h a long-term v i s i o n , j u s t l i k e t h e Gerrnan a u t o r o u t e s i n t h e t h i r t i e s a s a s o c i a l i n - v e s t m e n t . T h i s would g i v e some oxygen t o t h e now a i l i n g con- s t r u c t i o n and s t e e l i n d u s t r i e s .

S t i l l i n t h e f i e l d o f e n e r g y , e l e c t r i c i t y consumption w i l l p i c k up a g a i n i n t h e n i n e t i e s . N u c l e a r power s t a t i o n s r e q u i r e c o n s t r u c t i o n t i m e s o f a d e c a d e nowadays. T h i s means w e s h o u l d s t a r t c o n s t r u c t i n g them now t o have them r e a d y f o r t h e n e x t boom.

Mechanical and e l e c t r o - m e c h a n i c a l i n d u s t r i e s , d e e p i n t h e doldrums a t p r e s e n t , would c e r t a i n l y welcome t h e move, and a r e i n f a c t

p u s h i n g i n t h a t d i r e c t i o n . I c h o s e t h i s c o u p l e o f e a s y examples o n l y t o show t h e l i n k s between g e n e r a l f e a t u r e s and a c t u a l d e c i -

s i o n s .

E n t r e p r e n e u r s w i l l sow t h e seeds of t h e upswing d u r i n g t h e n e x t twenty y e a r s by l a u n c h i n g new p r o d u c t s . About a hundred o f them a c c o r d i n g t o my e s t i m a t e s . Fhy n o t h e l p by g i v i n g them money, making them h e r o s and p e r h a p s d e t a x i n g them? A s t h e y w i l l have a l o t o f t e c h n i c a l problems t o s o l v e t o s t a r t t h e i r t h i n g s ,

why n o t p u t a t t h e i r d i s p o s a l , f o r n o m i n a l f e e s , t h e r e s e a r c h a r s e n a l s o f t h e s t a t e s ? I n c i d e n t a l l y , t h e i n v e n t i o n c u r v e o f t h e

1980 wave shews that p r a c t i c a l l y a l l i n v e n t i o n s g o i n g i n t o o u r i n n o v a - t i o n wave a r e a l r e a d y made. W h a t ' s n e c e s s a r y i s d e v e l o p m e n t , a n d t h a t ' s where t h e a r s e n a l s a r e a t b e s t .

D e s p i t e a l l m e a s u r e s an a w f u l l o t o f p e o p l e h a v e t o h o v e r between t h e s i n k i n g o l d and t h e e m e r g i n g new. T h i r t y - f i v e m i l l i o n p e o p l e a r e now o f f i c i a l l y o u t o f mrk i n w e s t e r n c o u n t r i e s , a n d t h e y may r e a c h s e v e n t y m i l l i o n s f i v e y e a r s from now. F e a t h e r - beddi-ng them w i t h a l m o s t f u l l s a l a r i e s a s i t i s done now i n

Europe, c a n be v e r y Christian b u t c a n n o t l a s t . T h i s h a s been f e l t a l r e a d y , e . g . i n I t a l y , where t h e economy i s r a p i d l y g o i n g u n d e r - ground. T h i s d o e s n o t mean a r e b e l l i o n , b u t o n l y t h a t t h e r u l e s arc r e a d j u s t e d t o t h e new b o u n d a r y c o n d i t i o n s s h o r t - c i r c u i t i n g i n s t i t u - t i o n a l r i g i d i t y . T h a t o f t h e u n i o n s t o s t a r t w i t h . O r i n s t i t u - t i o n a l g r e e d l i k e s t i f l i n g t a x a t i o n . I t i s good t o see t h e s y s t e m f i g h t i n g t o s u r v i v e a t t h e g r a s s r o o t s l e v e l . And t h e s y s t e m i n power c a n n o t a v o i d a c c e p t i n g r e a l i t i e s . I t would o b v i o u s l y have been w i s e r t o p r e c e d e them.

A v e r y i m p o r t a n t i s s u e i n my o p i n i o n w i l l b e t h a t o f k e e p i n g p e o p l e c o r r e c t l y i n f o r m e d . The Harvard Economic S o c i e t y , e . g . , was w r i t i n g i n i t s Weekly L e t t e r s " a s e r i o u s d e p r e s s i o n l i k e t h a t o f 1920-21 i s o u t s i d e t h e r a n g e o f p r o b a b i l i t y M ( N o v e m b e r 2 , 1 9 2 9 ) .

" B u s i n e s s w i l l t u r n f o r t h e b e t t e r t h i s month o r n e x t , r e c o v e r i n g v i g o r o u s l y i n t h e t h i r d q u a r t e r and e n d t h e y e a r a t a l e v e l sub- s t a n t i a l l y above n o r m a l " (May 1 7 , 1930)

.

" S t a b i l i z a t i o n of p r e s e n t d e p r e s s i o n l e v e l s i s c l e a r l y p o s s i b l e " ( O c t o b e r 31, 1 9 3 1 ) . "The r e c e s s i o n i s j u s t a b o u t o v e r " ( F o r t u n e , March 2 2 , 1982)

.

^{Not t o}

f o r g e t , 1983 i s i n t h e same s t r u c t u r a l p o s i t i o n of 1929!

Small l i e s and p r o c r z s t i n a t i o n s may f i n a l l y l e a d t o r a g e a n d t h e c a l l f o r a s t r o n g man t o r e c r e a t e o r d e r . T h i s d i d happen i n t h e t h i r t i e s , t o a p o i n t even i n a s e a s o n e d d e n o c r a c y l i k e t h e US.

Simple i n s t i t u t i o n a l changes c o c l d g r e a t l y h e l p . P a r t - t i m e work, t o g i v e o n e , s o b i t t e r l y r e j e c t e d by u n i o n s i n t h e p a s t , n o t o n l y c o u l d keep more p e o p l e above t h e b r e a d l i n e , b u t would

g i v e them t h e chance t o hop i n t o a new a c t i v i t y h o l d i n g a l i f e l i n e i n c a s e t h e y m i s c a l c u l a t e d . I n o t h e r words, it i n c r e a s e s m o b i l i t y and c r e a t i v i t y . M o b i l i t y c o u l d a l s o be implemented v i a a p r o p e r c o r r e c t i o n of c u r r e n t housing r u l e s where now p e o p l e

" i n " have i n f i n i t e p r i v i l e g e s and p e o p l e " o u t " none, s o t h a t no- body moves. Work o p p o r t u n i t i e s a r e o f t e n hundred m i l e s away.

D e f i c i t s p e n d i n g , as I s a i d , can b e s e e n a s a c o n f i s c a t i o n o f money s a v e d , r e d i s t r i b u t e d f o r s o c i a l r e a s o n s . I n t h i s form i t may n o t l a s t l o n g . But t h e r e d i s t r i b u t i o n c o u l d s t i l l be o b t a i n e d by more n a t u r a l and h o n e s t means, i n p a r t i c u l a r by pro- v i d i n g a c e r t a i n c l a s s o f s e r v i c e s , s t i l l i n g r e a t demand, be it b a b y - s i t t i n g o r plumbing o r house r e s t o r a t i o n . The c o r r e s p o n d i n g j o b s went o u t o f f a s h i o n when i n d u s t r i a l myth proposed z u t f a s t e n i n g a s a supreme accomplishment and s o c i a l l i b e r a t i o n . R e a l i z i n g t h a t t k e t u n n e l i s v e r y l o n q may revamp them. I n s t i t u t i o n s and media c o u l d c e r t a i n l y h e l p .

By c h a n g i n g w e i g h t s I a m a l s o p e r h a p s i n c a u t i o u s l y s t a t i n g . t h a t Reaganomics, T h a t c h e r o m i c s , M i t t e r a n d o m i c s , e t c . , a r e bound t o f a i l , a s a r e t h e m o n e t a r i s t s :>7ho a r e n e r v o u s l y t u r n i n g d i s -

c o n n e c t e d knobs. I t i s o b v i o u s l y a t a l l Q ~ J = , b u t I c a n ' t h e l p i t . I ' m o n l y a s t u d e n t o f t h e system.

REFERENCES

K a u t s k y , K . K r i s e n t h e o r i e n . Neue Zeit, XX. J a h r g a n g , 1901-2.

K o n d r a t i e f f , N. D .

,

D i e l a n g e n Wellen d e r K o n j u n k t u r . A r c h i v f a r S o c i a l w i s s e n s c h a f t und S o z i a l p o l i t i k . Band 5 6 , Tdbingen

1926.

K o n d r a t i e f f , N . D . D i e P r e i s d y n a m i c d e r i n d u s t r i e l l e n und l a n d - w i r t s c h a f t l i c h e n Waren. A r c h i v f a r S o z i a l w i r t s c h a f t und

S o z i a l p o l i t i k . Band 6 0 , T m i n g e n 1928.

M a r c h e t t i , C. und N. N a k i c e n o v i c . The Dynamics o f Energy S y s t e m s and t h e L o g i s t i c S u b s t i t u t i o n Model. RR-79-13. I n t e r n a t i o n a l I n s t i t u t e f o r A p p l i e d S y s t e m s A n a l y s i s , L a x e n b u r g , A u s t r i a . December 1 9 79.

M a r c h e t t i , C. S o c i e t y as a L e a r n i n g System: D i s c o v e r y , I n v e n t i o n , a n d I n n o v a t i o n C y c l e s R e v i s i t e d . RR-81-29. I n t e r n a t i o n a l

I n s t i t u t e f o r A p p l i e d S y s t e m s A n a l y s i s , L a x e n b u r g , A u s t r i a . November 1 98 1

.

N a r c h e t t i , C. The C a r i n a S y s t e m C o n t e x t . The L a s t 80 Y e a r s , a n d t h e Next 20. WP-82-5. I n t e r n a t i o n a l I n s t i t u t e f o r A p p l i e d Systems A n a l y s i s , L a x e n b u r g , A u s t r i a , J a n u a r y 1982.

S c h u m p e t e r , J . A . B u s i n e s s C y c l e s : A T h e o r e t i c a l , H i s t o r i c a l and S t a t i s t i c a l A n a l y s i s o f t h e C a p i t a l i s t P r o c e s s . V o l . 1 , 2.

New York 1939

T r o t z k y , L. V e s t n i k S o t s i a l i s t i c h e s k o i Akademii. N . 4 , A p r i l - J u n e 1923.

Z a h a v i , Y. The UMOT

-

Urban I n t e r a c t i o n s . DOT-RSPA-DPB, 10/7.

U.S. D e p a r t m e n t o f T r a n s p o r t a t i o n , W a s h i n g t o n , D . C . J a n u a r y 1981.

F i g u r e 2 .

CAR POPULATION IN SIX DIFPExXT COUNTRIES AS PERCENTAGE OF SATURATION LEVEL

F i g u r e a t l e f t r e p r e s e n t s s a t u r a t i o n p o i n t i n m i l l i o n c a r s . F i g u r e i n p a r e n t h e s i s i s t i m e c o n s t a n t f o r p e n e t r a t i o n , i n y e a r s .

F i s f r a c t i o n o f s a t u r a t i o n l e v e l .

30

-

^{U.S. DATA 0} TOTAL ENERGY

A ELECTRlCAL ENERGY

Z

0, 20-

I- a

-

lo-

a

I-

YEAR

F i g u r e 6 . O s c i l l a t i o n o f p r i m a r y e n e r g y demand i n US

~ P O U ~ ~ t h e fundamental e x p o n e n t i a l growth c u r v e , e x p r e s s e d a s p e r c e n t d e v i a t i o n .

F i g u r e 7.

INVENTION AND INNOVATION WAVES - THE SECULAR SET

LEGEND:

US Heat

1

^{Con lndex}

& Light (1850 = 100) Gulf Oil

1

Cost lndex OPEC Oil (1 940 = 100) OIL,

& LIGHT OPEC

.5 _s 20 ¹⁰

-

^{US Data}

d

_w ⁰

c A Electrical Energy

a

^-10

ii. Total Energy

a -20