Kondratieff Wave and the Coming Big War

Reasons for this war will be the intense competition mainly on raw materials and markets as well as on the multipolar distribution of military power among big countries.
Fotini Mastroianni | Oped Column Syndication
Fotini Mastroianni

Nikolai Kondratiev was a Russian economist who was executed by Stalin in 1938 due to his opposition to the collectivization of the earth and due to his claim that capitalism would always return and will never die.

Kondratiev became known for his famous waves which last 50–60 years and which consist of the expansion, the crisis and the contraction, upon which capitalism is renewed.

Tom Drake mentioned the four seasons in The Kondratieff Wave in a Maple Money article. These are:

  • Spring (25 years) – Inflationary phase with rising stock prices and increased employment and wages.
  • Summer (3-5 years) – Stagflation phase with rising interest rates, rising debt and stock corrections. Imbalances lead to war.
  • Autumn (7-10 years) – Deflation phase where falling interest rates lead to a plateau and stock prices increase sharply.
  • Winter (3 year collapse and 15 year readjustment) – Depression phase with stock and debt markets collapsing and commodity prices increasing.

According to analysts, in the recovery of the fifth Kondratiev wave, the beginning of a new world war is estimated around 2020. The reasons for this war will be the intense competition mainly on raw materials and markets as well as on the multipolar distribution of military power among big countries. New forces will create a new hegemony.

Some researchers (Chase-Dunn and Podobnik, 1999) argue that the European Union led by Germany, with a 50/50 chance, will be involved in a global military controversy with the US in 2020. The other possibility is the US-Japanese war. Wallerstein (2000) argued that a war between Europe and Asia in the 21st century was most likely. Goldstein (2005) estimates the existence of war in 2025, while Boswell (1999) estimates it for the years 2010–2020.

It is a fact, however, that the conditions that have been shaped and are still being shaped bring the Western world (mostly Europe) under constant pressure at all levels. China and India have been emerging as giants in the East demographically, economically and (possibly) militarily., while the population in the West shrinks.

Migration was thought to not only solve the West’s demographic problem and the problems in the pension system, but also boost the economy through the market and real estate growth.

However, this thought failed to take the Kondratiev cycle into account. In the downfall phase of the Kondratiev cycle, there’s shrinking jobs. This is something we’re experiencing now. We’re heading towards a scenario where there will be massive groups of unemployed people (both locals and immigrants). Public budget will be burdened, since the benefits given will be much higher than the taxes paid.

In addition, continuous automation causes further jobs shrinking and, therefore, there will be redundant ‘working hands’. What’s more, the transfer of skills and knowledge through telecommunication is now very easy and fast. Hence, there’s no need for ‘local working hands’.

Regarding the birth rate, the newcomers in a country and their children have been shown to have birth rates lower than those of the natives (observed in Canada and in Greece with the entry of Albanian immigrants). The demographic problem in the West stems from (i) the problems faced by the modern woman and has to do with both economic insecurity and non-protection of motherhood by the state (nurseries, maternity leave, etc.) and (ii) the instability of modern relationships (growing number of divorces). Moreover, the working environment is negative for motherhood.

A population that is renewed and age distribution is smooth can only bring some smoothness to the fall (winter) stage of Kondratiev cycles, and this goal can be achieved if there is a balance between personal and professional lives of women and young people in general. Another solution to avoid the significant impact of the Kondratiev winter cycle is surplus capital of the rich countries to be invested in poor countries so as to contribute substantially to their development and economic growth.

Maybe this way, it will be possible to avoid the predicted (next) world war, which will be devastating to humanity.

Fotini Mastroianni is an economist, MBA lecturer, writer, blogger from Athens, Greece. She had taught, among others, at the University of Wales & the University of Glyndwr.

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