Technological Long Waves

  

The Kondratiev Wave is an important element of World-Systems Theory. The graphic above is taken from Andreas Goldschmidt and gives historical specifics for technological cycles. Goldschmidt's formulation allows for the idea to be tested (one of the models I always test), is partially consistent with economic Growth theory (particularly if we do not assume a functional form for exogenous disembodied technological change in the Solow-Swan Model) and I can present some examples.

• The Iranian Economy prior to 1979 and associated Tech Bubble.

Liberalsim vs. Neoliberalism

 

I have been trying to reconcile Liberalism with Neoliberalism and put the two within David Easton's Political System. My reconciliation is:

Neoliberalism was very specific about specifying required values for Political Outputs, Liberalism less so. However, the Liberalism positions an be "filled in" by contrast to available Neoliberal positions.

First,  I'll summarize Easton's model and then go on to expand on his Political Outputs. Finally, I'll ask what Political Inuts and Feedback have to do with Liberal and Neoliberal models.

 

Notes

ChatGPT

Feature	Liberalism	Neoliberalism
Time period	18th-19th century origins	Late 20th century
Primary goal	Broad individual freedom	Market efficiency & competition
View of the state	Limited but essential for rights	Minimal, facilitator of markets
Markets	Useful but not absolute	Central organizing principle
Social policy	Some support for welfare	Shrink welfare; use market mechanisms
Freedom	Civil and political freedom	Freedom as market choice
Attitude toward inequality	Liberties more important, but some thinkers favor moderation	Often accepts inequality as necessary

World-System (1960-present) How will a Negative Shock from the US Affect the Economy of Venezuela?

Nov 16, 2025. NBC News is reporting (here) that:

The nation’s most advanced aircraft carrier arrived in the Caribbean Sea on Sunday in a display of U.S. military power, raising questions about what the new influx of troops and weaponry could signal for the Trump administration’s drug enforcement campaign in South America.

If the US were to take some kind of military action against Venezuela (whatever the pretext), the result would be a strong negative shock to the Economy of Venezuela, which has been through many shocks in the late 20th and early 21st Centuries. According to Wikipedia (here):

An ongoing socioeconomic and political crisis began in Venezuela during the presidency of Hugo Chávez and has worsened during the presidency of successor Nicolás Maduro. It has been marked by hyperinflation, escalating starvation, disease, crime, and mortality rates, resulting in massive emigration.

The VEL20 US-input model (see the Notes below) is based on 50 years of data (1960-2010) drawn from the World Development Indicators (see the Boiler Plate). Without knowing the extent of the shock or whether it might actually happen, we can at least assume that the shock will be negative and ask how the economy has behaved to a large, standardize shock in the past.

The graphic above shows a one standard deviation negative shock (Impulse Response) to the state of the Venezuelan Economy transmitted from the US (see the Measurement Models in the Notes below):

• The First Column shows the effect of a negative shock from US Overall Growth (US1) to (1) VE1, Overall Growth in the Venezuelan Economy (continuing negative effect), (2) VE2, the GDP-Unemployment Controller (continuing negative effect) and (3) VE3, the Environmental Controller (temporary positive effect).
• The Second Column shows the effect of US Financial Markets (US2) on (1) VE1, Overall Growth (temporary positive), (2) VE2, Unemployment (continuing positive effect) and (3) VE3, Environmental (continuing negative effect).
• The Third Column shows the effect of US Globalization (US3) on (1) VE1, Overall Growth (permanent negative), (2) VE2, GDP (continuing negative) and (3) VE3, Environmental (continuing negative).

The overall effect, as might be anticipated, of US military action would be very negative for the Economy of Venezuela, one more negative shock in a long history of negative shocks. The Trump II Administration would probably argue that, in the long run, the effects would be positive if the illegitimate Administration of President Nicolás Maduro were ended. Everything depends on what would happen after any military action and no one knows the future.

One possibility (which seems unlikely) is that Venezuela would return to Business-As-Usual with a competent Centrist, technocratic Administration. You can experiment yourself with the VEL20 BAU model (here) and explore various scenarios.

Notes

For more information on other Geopolitical Options, see the Venezuelan Blog Roll (here). For more information about how the Dynamic Component State Space models were constructed, see the Boiler Plate.

VEL20 Measurement Model

USL203 Measurement Model

VEL20 US Input System Matrices

 

 

World System, Economic Systems, Political Systems and Neoliberalism

 

I've always been both impressed and confused by David Easton's model of the Political System: Impressed because of the System's Perspetive and Confused  because it does not seem to match my concrete experience with the Political System in the US which right now seems to be dominated by Neoliberalism. In the post, I'm going to put the two ideas together and sort out the result.

Notes

ChatGPT Definitions

Political System

Economic System

Neoliberalism

World-System (0-2000) What Caused the Industrial Revolution?

                 

The graphic above is a time plot of World Aggregate Production (W_Q) taken from Maddison (see the Boiler Pate).  The growth of Capitalism is typically data from 1500-Present with a clear visible take-off starting in the 19th Century. The burning question is "Why"!

ChatGPT (an AI Systems) produces the graphic above as an answer to the question "What Caused the Industrial Revolution".*** One can quibble with some of the links in the graph ("Why aren't Profits plowed back into the production process?", "What about Environmental Impacts?", etc.), but the graph is a good place to start.

The Kaya Identity is another good place to start (notice the Kaya Identity does not have feedback loops).

The causes of the Industrial Revolution are not possible to consider in one post, but I think there is a causal explanation that has been missed and I will investigate it in future posts.

Notes

*** Actually, my question was about feedback loops in the Industrial Revolution but you can asked the "What Caused" question yourself here. Google AI provides the following answer:

AI Overview

The main causes of the Industrial Revolution include 

• a combination of the Agricultural Revolution, which freed up labor and increased foodproduction;
• technological innovations like the steam engine and new machinery that mechanized production;
• access to natural resources such as coal and iron;
• economic and political factors like capitalism, available capital, and supportive government policies;
• and an increase in population growth and made, which created both a work force and demand for goods.

Agricultural advancements

The enclosure movement:Landowners consolidated smaller plots of land, making farming more efficient and forcing many rural laborers to seek work in cities.

New farming techniques:Innovations like Jethro Tull's seed drill increased crop yields, supporting a larger population.

Technological innovation

New inventions:

Key inventions like the spinning jenny, water frame, and steam engine revolutionized production in the textile and other industries.

Mechanization:

Machines could produce goods faster and more cheaply than by hand, leading to the development of the factory system.

Economic and political factors

Capitalism:

An economic system with private property and free enterprise encouraged investment and risk-taking.

Available capital:

A large amount of money was available for investment in new businesses and technologies.

Supportive government:

Policies, such as those protecting property rights and patents, encouraged innovation and industrial growth.

Abundant natural resources:

Britain, the birthplace of the revolution, had large deposits of coal for power and iron for machinery, often located near waterways for transport.

Growing population:

Population growth provided both a large workforce for factories and a bigger market for consumer goods.

Improved transportation:

Systems like canals and later railroads made it cheaper and faster to transport raw materials and finished products.

References

World-System (1960-2150) La French TECH Cycles

In a prior post (here) and in prior posts on the French Economy (here), I have found that the French Economy (or at least my model of it) is approaching a Steady State. My hypothesis is that the approaching steady state might (in addition to a lot of other forces) be creating Political Instability. However, no one knows the Future and we have to entertain other hypotheses.

The current 2025 Noble Prize in Economics offers another hypothesis. History teaches us that new technologies and Creative Destruction will eventually break steady states and send Economic Systems on to new Attractor Paths. The hypothesis is the essential argument of Kondratiev Wave Theory (here) and is embraced by World-Systems Theory. An alternative forecast for France is that the Steady State will not happen due to La French TECH.

The graphic above plots two historical forms of French Technology: Productivity (TECHP) and Efficiency (TECHE) (see the Notes below). Notice that they are both cyclical (echoes of Schumpeter's Creative Destruction model which is also cyclical but unstable). Notice also that TECHP (productivity) peaks before TECHE (efficiency): once a productivity peak is reached, focus turns toward efficiency until all gains are exhausted.

Unfortunately for France, both of these technological peaks (at least in my model which is estimated from World Development Data) are going to be reached in the near future: (1) reinforcing the steady state or (2) creating more instability and a search for new technologies to put the economy on another growth path. Since we do not know the Future, nothing is guaranteed.

For more on Stable French Technology Cycles see the post here. Schumpeter's Creative Destruction model predicts unstable Creative Destruction cycles and the French Technology Cycles are stable.
 

Notes

FR TECH Measurement Models

The two types of Technological Change  (TECHP and TECHE) are explained in a post on Technology in the United Kingdom which also is a good comparison to the French Model. Essentially, TECHP is productivity (output per capita)  and TECHE is efficiency (for example, CO2 emissions relative to energy consumption).

World-System (1960-2150) Unstable Cycles in Colombia

 

Notes

CO_L20 Measurement Matrix:

CO_L20 BAU System Matrix:

CO_L20 BAU Stabilized Sytem Matrix: