Kondratieff – and a new gate for achieving Social Quality?

Contributing to the debate on “Cyclical Patterns in Global Processes, Kondratieff Cycles and the Concepts of Long-Term Development of Russia and the World”

I’m not entirely sure if and to which extent I can contribute something really new by approaching the topic from different perspectives: economics, political science and sociology. The ambiguity of the Kondratieff approach, the approximate character of the “waves” or “cycles” had been frequently mentioned throughout the years – and actually had been also the point behind contesting his concept from the “official” side during the Soviet times.

My fundamental concern is the following:

1. it is the aim to present a wider understanding of what the foundation of the cyclical movement is – thus it is about the discussion of some theoretical aspects;
2. this perspective may help to understand where we are actually today, and not least: what possible political conclusions can be presented.

I. THEORETICAL CONSIDERATIONS – A wider framework for analysing waves

I want to start with a broad reference to the French theory of regulation, and in particular a definition of the accumulation regime given by Andre Lipietz. He strongly emphasis in the fact of a – temporary – correspondence of the actual accumulation as it is part of the production and the pattern of consumption. Looking at consumption, he refers especially to the “unproductive” dimension, i.e. the part of consumption that is part of reproduction of life. Nevertheless, this consumption can only be understood as part of the overall reproductive process of the economy (Lipietz, Alain, 1986: New Tendencies in the International Division of Labor: Regimes of Accumulation and Modes of Regulation; in: Scott/Allen J./Storper, Michael [eds.]: Production, Work, Territory. The Geographical Anatomy of Industrial Capitalism; Boston/London/Sidney: Allen&Unwin: 16-40). In this understanding it is closely linked to Engels’ emphasis of the understanding of the materialist conception of history with the focus on the production of everyday’s life (see Engels, Frederick, 1880: Socialism Utopian and Scientific; in: Karl Marx Frederick Engels. Collected Works Volume 24. Marx and Engels 1874-1883; London: Lawrence&Wishart, 1989: 281-325; in particular 306). In a narrower understanding, this is of course not least a matter of the location of purchasing power within the society’s economy.

From here it is only a small step to fully understand the meaning of civilisational character of the entire question of the development – this had been mentioned in the presentation by Yuri V. Yakovets. I want to refer here to Paul Boccara, who stated in his recent book:

C’est pourquoi, en liaison avec l’ « économie » c’est-à-dire les règles (nomos en grec) de la transformation  de la nature extérieure (oekos en grec) ou si l’on veut du système écologique, on peut parler d’ « anthroponomie », pour les règles du système de transformation de la nature humaine (anthropos en grec)

(Boccara, Paul, 2012 : Le Capital de Marx, son apport, son dépassement au-delà de l’économie ; Paris : Le Temps des Cerises : 19)

In this light, technological development is always very much also a matter of specifically “directing” demand – in a side remark I may refer to Alfred Kleinknecht who reminds us that

[t]he expansionary effects on demand of such investments can be described in analogy with the standard Keynesian income multiplier model. The seize of the expansionary multiplier effects would, of course, depend on how revolutionary were underlying innovations, the rate of subsequent (major and/or minor) innovations, and their degree of diffusion.

(Kleinknecht, Alfred: Long-Wave Research: New Results, New Departures – An Introduction; in: Kleinknecht, Alfred/Mandel, Ernest/Wallerstein, Immanuel (eds.): New Findings in Long-Wave Research; New York: St. Martin Press, 1992; 1-12; here: 9)

Before looking a bit more in detailed into this matter, I want to remind ourselves of the two departments – implicitly mentioned already in the quote from Engels’ text. These are about the means of production in department I and the consumables in department II.

I want to suggest in particular in the light of the more or less recent developments – though not referring to the immediate past – to extend this perspective by adding two departments. A department III had been actually mentioned already a long time ago – when finance capitalism entered capitalism at an earlier stage. It had been Rosa Luxemburg who outlined in her book on ‘The accumulation of capital’ the financial sector as department III (see Luxemburg, R., 1913. The Accumulation of Capital. [Trans. A. Schwarzschild, Introduction by J. Robinson, 1951]; London: Routledge and Kegan Paul: passim). In addition, I want to propose a department IV as an umbrella for producing invisible assets as for instance management, knowledge, design, knowledge management etc. . It may well be worthwhile to consider here as well part of public administration with an exponential growth; but also “time” and “space” which can be increasingly seen at least in some way “man-made” with its virtual dimension.

All these invisible assets a surely not new – they, as well as finance capital played a major role earlier. For instance we discussed in the 1960s/70s the role of science as immediate productive force – at least this can be seen as an indicator for the importance we gave it. The new character can probably be grasped by saying that all these factors are now distinct, play a very specific role in the overall shape of the economy.

Of course, we all remember the crucial distinction Marx presented with regard to the overall process, analysing production, consumption, distribution and exchange all being integral part of the process.

My proposal here is to link this with the extend view on departments,

I – means of production

II – consumables

III – “financial services”

IV – “invisible assets”

II WHERE EACTLY ARE WE STANDING NOW?

Given this framework, we can now move to the question of how to understand the current situation.

A crucial point is that the capitalist formation had been up to hitherto characterised by

• specific forms of marketisation – according to Karl Polanyi markets a not per se a matter of establishing market societies
• the emergence of the market principle as dominating production – Polanyi points this out, stating:

A market economy is an economic system controlled, regulated, and directed by markets alone; order in the production and distribution of goods is entrusted to this self-regulating mechanism. An economy of this kind derives from the expectation that human beings behave in such a way as to achieve maximum money gains. It assumes markets in which the supply of goods (including services) available at a definite price will equal the demand at that price. It assumes the presence of money, which functions as purchasing power in the hands of its owners. Production will then be controlled by prices, for the profits of those who direct production will depend upon them; the distribution of the goods also will depend upon prices, for prices form incomes, and it is with the help of these incomes that the goods produced are distributed amongst the members of society. Under these assumptions order in the production and distribution of goods is ensured by prices alone.

(Polanyi, Karl: The Great Transformation. The Political and Economic Origins of our Times; Boston, MA: Beacon Press, 2001: 71)

Continuing, he summarises a little later – with reference to W. Cunningham (Economic Change; Cambridge Modern History, Vol . I)

The extreme artificiality of market economy is rooted in the fact that the process of production itself is here organized in the form of buying and selling.

(77)

• the shift to the distinctly dominant market of consumables – this finally representing the decisive step towards the market society
• finally the move towards the dominance of invisible assets – including the increased meaning of so-called financial services.

This is in some way a different formulation of the undercurrents of Kondratieff’s waves, taking it from a presentation by Carlotta Perez:

1771 – The ‘Industrial Revolution’ (machines, factories and canals)

1829 – Age of Steam, Coal, Iron and Railways

1875 – Age of Steel and Heavy Engineering (electrical, chemical, civil, naval)

1908 – Age of the Automobile, Oil, Petrochemicals and Mass Production

1971 – Age of Information Technology and Telecommunications

20?? – Age of Biotech, Nanotech, Bioelectronics and New Materials?

(Perez, Carlotta, 2011: The direction of innovation after the financial collapse. ICT for green growth and global development; 9TH Triple Helix Conference Stanford, July 2011: Slide 3)

This always went hand in hand with a specific international division of labour and division of consumption, including a difference between simple and extended reproduction of people’s daily life.

This evokes the proposal of a new phase we are facing now: whereas we find in the earlier development a move towards socialisation of production and consumption and with this socialisation of securitisation, we find currently a move “back forward”:

• it is a matter of technological development
• it is a matter of shifting productive orders globally and internationally
• and it is also shifting patterns of consumption.

In some respect we may put one thesis forward: we find now a real quantum leap of globalisation: although the commonly known divisions between centre and periphery are in many respects maintained, we find nevertheless a more rigid “unification” of the entire capitalist structure in “one global capitalist system”. Of course, in detail a differentiated analysis and debate has to be undertaken – not least in the light of André Gunder Frank’s and Barry Gills’ thesis of the 5,000 years development on the one side (see on this discussion Frank, André Gunder/Gills, Barry K., 1993: (Eds.): The World System. Five Hundred Years or Five Thousand; London/New York: Routledge: 1996) and on the other side of Giovanni Arrighi’s suggestion that we are witnessing a “shift to the east”. A brief and tentative remark on the latter may be made by way of suggesting a historical perspective: it seems to be obvious that all previous shifts – from the Genoese centre and the Italian city states to the Netherlands to England and later to the USA had always been accompanied by a profound increase of international integration. Speaking of a shift then suggests a one-sided interpretation, emphasising – by highlighting the emergence of a new centre – one side, fading out the fact of an increased global integration. The early Italian city states had been still somewhat autonomous, self-sustaining in their more or less small realm; it would be foolish already for the emerging Dutch empire if we would want to maintain such thesis.

Another point has to be made: all these shifts – and we should go much beyond the periodisation commonly suggested in long-wave theories – are in particular concerned with a shift in basic patterns. We can see this in particular as matter of following secular trends:

• socialisation of production increases tremendously
• and so does the private character of appropriation
• we can formulate this in another way, saying that the socialisation of corporate, i.e. private costs
• is the reverse of the individualisation of costs of private households, i.e. the costs of living.

This merges into the production of different standards which goes hand in hand with a shortening of circles consumption, the latter, as excessive consumption of a minority, however only serving as crutch for maintaining accumulation. This is true although the number of rich people is somewhat increasing.

III. CHALLENGES

One of the major points of current economic developments is a the emergence of an economy of invisibility. Adam Smith’s invisible hand is now further hidden, transposed into a phantom of invisible assets. Being privately appropriated, they are surely still very much a phantom. And in their phantomised form, they can also be seen as threat as they can temporarily be used as means of accumulation that is more or less completely separated from any real economic basis: the well known bubble-economies, especially manifested by the synchronisation of accumulation and consumption cycles and the synchronisation of their failure.

But the bubble economies are themselves hiding another aspect: the increase of relative poverty. We may assume with some justification a changing pattern of the distribution of wealth/poverty. Tony Atkinson tentatively presented this, by pointing out that the juxtaposition of rich and poor countries needs today some qualification: inequality and the tension between affluence and poverty is now less a matter between countries, in particular between the rich north and the poor south. Rather, we are today more and more confronted with a global minority of affluent people and vice versa a global majority of people with relatively little resources. One indicator can be seen in the fact of a relevant number of the richest people and enterprises in the countries of the south – the richest family in 2012 actually coming from Mexico, rank 7 occupied by a Brazilian (see Forbes: The World’s Billionaires; http://www.forbes.com/billionaires/list/ – 06/12/2012). This is also reflected in the fact that the previously stable middle classes are increasingly crumbling away, Brazilianisation, we may speak in this respect of an Americanisation, looking at the turn of the society of self-made men towards a society of patchwork men – surely, the role of women even more under that.

So we may ask towards the end of this brief reflection if the main challenge of today is an attempt of levelling cycles including the orientation on a turning point; or a distributive shift. The first orientation is for instance strongly underlying contemporary debates on “Green Growth”. However, a problem posed by such orientation is that continues from and even strengthens the hegemony of a market society – mind: I am speaking of market society and not a market economy. Without delving into details, it is important to keep this distinction, as for instance importantly reflected upon by Karl Polanyi, in mind. The prevalent model and development of a market society is exactly that mechanism that is frequently problematised by social science and considered as matter of submitting the entire life under the auspices of the economy. It is about commodification, penetrating all pores of life as one side. And it translates into consumerism in connection with social positioning the wage worker, of which Karl Marx writes in the Economic and Philosophical Manuscripts of 1844 that

the fact that labor is external to the worker, i.e., it does not belong to his intrinsic nature; that in his work, therefore, he does not affirm himself but denies himself, does not feel content but unhappy, does not develop freely his physical and mental energy but mortifies his body and ruins his mind. The worker therefore only feels himself outside his work, and in his work feels outside himself. He feels at home when he is not working, and when he is working he does not feel at home.

(passim)

The alternative then is, indeed, the “re-establishment of society”. This goes far beyond a simple internalisation of costs, acknowledgement of non-market provisions and performances as part of “generating societal values” etc.. – Some shades of Keynesianism as for instance that advocated for by Joseph Stiglitz would argue for such orientation. It is about looking in a wider sense at the meaning of the production and reproduction of daily life. The Social Quality Approach looks at the social as

outcome of the interaction between people (constituted as actors) and their constructed and natural environment. Its subject matter refers to people’s interrelated productive and reproductive relationships. In other words, the constitutive interdependency between processes of self-realisation and processes governing the formation of collective identities is a condition for the social and its progress or decline.

(van der Maesen, Laurent J.G./Walker, Alan, 2012: Social Quality and Sustainability; in: van der Maesen, Laurent J.G./Walker, Alan (Eds.): Social quality: From Theory to indicators; Basingstoke: Macmillan: 250-274; here: 260)

To avoid any misunderstanding, this is not against the materialist understanding of

The materialist conception of history starts from the proposition that the production of the means to support human life and, next to production, the exchange of things produced, is the basis of all social structure

(Engels, op cit., passim)

Actually it is very much in support of this materialist conception, taking the entirety of living into consideration. It is about production and reproduction which is concerned with complex personalities and not with a simple de-contextualised biological mechanism. This includes technical and also mental changes the latter amongst other concerned with “modes of togetherness”. And as such changes of the mode of consumption are surely also a matter of course.

I tentatively suggest for further discussion the following moments for the actual changes we have to observe more closely, with this going far beyond searching for emergency measures that would be able to answer the immediate consequences of the current crisis:

the continued real socialisation of production in terms of bringing together

• the two dimensions of appropriation, one being a technical matter, the other being a matter property and control (see in this context Herrmann, Peter/Dorrity, Claire, 2009: Critique of Pure Individualism; in: Dorrity, Claire/Herrmann, Peter [eds.], 2009: Social Professional Activity – The Search for a Minimum Common Denominator in Difference; New York: Nova Science: 1-27)
• the true socialisation of costs – which paradoxically takes the form of privatisation of externalities
• the shortening of consumption circles.

All this can well be captured by revisiting the meaning of assets, taking “invisible” and “non-material” assets closely into account. It is also in this materialist context where we can locate a critical discussion of social values.