THE K-WAVE: THE 54-YEAR CYCLE BEHIND WAR, COMMODITIES AND LAND
In the early 20th century, economist Joseph Schumpeter popularised the term ‘creative destruction’.
He was describing what happens when a new way of doing things starts to become the norm.
The motor car that came to prominence in the 1950s, for example did not just replace the horse and carriage - it changed where roads were built, migration patters - where people lived and dictated which businesses would survive.
That process can create enormous wealth, but it rarely leaves that wealth in the same locations — or in the same hands!
Schumpeter got his insights from Russian economist, Nikolai Kondratiev.
Kondratiev was not the first to come up with theory, but his research was extensive.
He studied a bunch of wholesale commodity prices — textiles, coal, pig iron, gold etc, in France, England and the US. He also looked at wages, interest rates, rents and saving deposits.
In brief, Kondratiev argued that expansion and decline characterise capitalist economies, spanning approximately 54–60 years.
That’s 25–30 years up, and 25–30 years down.
These were not the ordinary ups and downs of a business cycle.
Kondratiev was looking at changes that unfolded over generations, using movements in prices, wages, interest rates and trade to trace the longer wave beneath them.
Kondratiev noticed that the good years tended to cluster together, as did the bad ones.
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