Modern Modifications of Kondratiev Theory
There are several modern timing versions of the cycle although most are based on either of two causes: one on technology and the other on the credit cycle.
Additionally, there are several versions of the technological cycles, and they are best interpreted using diffusion curves of leading industries. For example, railways only started in the 1830s, with steady growth for the next 45 years. It was after Bessemer steel was introduced that railroads had their highest growth rates; however, this period is usually labeled the "age of steel". Measured by value added, the leading industry in the U.S. from 1880 to 1920 was machinery, followed by iron and steel.
The technological cycles can be labeled as follows:
- The Industrial Revolution—1771
- The Age of Steam and Railways—1829
- The Age of Steel and Heavy Engineering—1875
- The Age of Oil, Electricity, the Automobile and Mass Production—1908
- The Age of Information and Telecommunications—1971
Any influence of technology during the cycle that began in the Industrial Revolution pertains mainly to England. The U.S. was a commodity producer and was more influenced by agricultural commodity prices. There was a commodity price cycle based on increasing consumption causing tight supplies and rising prices. That allowed new land to the west to be purchased and after four or five years to be cleared and be in production, driving down prices and causing a depression, as in 1819 and 1839. By the 1850s the U. S. was becoming industrialized.
A typical, somewhat updated sequence of technological Kondratiev Waves in the U.S. and some other leading Western economies can be seen in the table below:
| Period | Date (Prosperity to prosperity) | Innovation | Saturation point |
|---|---|---|---|
| First Industrial Revolution (Mechanical Age) | Circa 1787–1843 | Cotton-based technology: spinning weaving; atmospheric stationary steam engines replaced by high pressure engines, wrought iron, iron displaces wood in machinery, canals, turnpikes. Development of machine tools | Cotton textiles: British market saturated ca. 1800. By 1840, 71% of British cotton textiles were exported |
| Railroad and Steam Engine Era | Circa 1842–1897 | Age of machinery, steam railways, steam powered factories and steam shipping. First inexpensive steel, telegraph, animal powered combine harvesters, etc. Final development of and diffusion of machine tools and interchangeable parts. Emergence of petroleum and chemical industries and heavy industries after 1870. Expansion of water and sewer systems. | Canals: Late 1840s
1870: Steam exceeds water power and animal power. 1890s: Railroads. Track mileage continued to grow but much is later abandoned. |
| Age of steel, electricity and internal combustion | 1897–1939 | Steel, electric motors, electrification of factories and households, electric utilities, aluminum, chemicals and petrochemicals, internal combustion engine, automobiles, highway system, Fordist mass production, telephony, beginning of motorized agricultural mechanization, radio. Electric street railways help create streetcar suburbs. Build out of urban and suburban public water supply and sewage systems. | 1917: Railroads nationalized. Post World War I short depression. Railroads and electric street railways decline after 1920. Horses, mules and agricultural commodities: 1919. After 1923 industrial output rises as workforce slowly declines. Depression of 1930s: Overcapacity in manufacturing, real estate. Work week reduced from 50 to 40 hours in mid-1930s. Total debt reaches 260% of GDP during early 1930s. |
| War and Post-war Boom: Suburbia | 1939–1982? | Oil displaces coal. Suburban growth and infrastructure. Greatest period of agricultural productivity growth 1940s-1970s. Consumer goods, semiconductors, business computers, plastics, synthetic fibers, fertilizers, television and electronics, green revolution, military-industrial complex, diffusion of commercial aviation and air conditioning, beginning nuclear utilities. | 1940s-50s: Diesel locomotives replace steam.
1971: Peak U.S. oil production 1973: Peak steel consumption in U.S. Pennsylvania steel cities and industrial midwest turn into "rust belt". 1973: Slow economic and productivity growth noted. 1980s: Highway system near saturation |
| Post Industrial Era: Information Technology and care of elderly | 1982? – ?? | Fiber optics and Internet, personal computers, wireless technology, on line commerce, biotechnology, Reagan's "Star Wars" military projects. Energy conservation. Beginning of industrial robots. In the U.S. health care becomes a major sector of the economy (16%) and financial sector increases to 7.5% of economy. | 1984: Peak U.S. employment in computer manufacturing.
Long term decline in U.S. capacity utilization 1990s: Automobiles, land line telephones, chemicals, plastics, appliances, paper, other basic materials, commercial aviation. 2001:Computers, fiber optics 2000s: Crop yields approach limits of photosynthesis. 2008: Developed world on verge of depression. Widespread overcapacity except some nonferrous metals and oil. Large housing and commercial real estate surplus. GDP no longer responds to increases in debt. Total debt exceeds 360% of GDP by late 2009. |
Read more about this topic: Kondratiev Wave
Famous quotes containing the words modern and/or theory:
“The modern city hardly knows pure darkness or pure silence anymore, nor does it know the effect of a single small light or that of a lonely distant shout.”
—Johan Huizinga (1872–1945)
“The great tragedy of science—the slaying of a beautiful theory by an ugly fact.”
—Thomas Henry Huxley (1825–1895)