PREDICTIONS – 10 Years Later - Santa Fe Institute

8. A COSMIC HEARTBEAT
the predicted level of 20 1996-dollars per barrel throughout
the decade.
WAVES AT THE WALL STREET
Empirical evidence of long waves in economic activity has existed since
the beginning of the Industrial Revolution. William S. Jevons (as cited
by Alfred Kleinknecht 8 ) talked about them as early as 1884, and even
then he cited earlier works. Much of the debate that has followed around
this issue concerns whether these variations are accidental or consequences
of the way economic growth is linked to profits, employment,
innovation, trade, investment, and so forth. A more contemporary
scholar, Joseph A. Schumpeter, tried to explain the existence of economic
cycles by attributing growth to the fact that major technological
innovations come in clusters. 9 An extended list of references on long
economic waves can be found in an article by R. Ayres. 10 However, one
person deserves special mention, the Russian economist Nikolai. D.
Kondratieff, whose classic work in 1926 resulted in his name being associated
with this phenomenon. 11
From economic indicators alone Kondratieff deduced an economic
cycle with period of about fifty years. His work was promptly challenged.
Critics doubted both the existence of Kondratieff’s cycle and
the causal explanation suggested by Schumpeter. The postulation ended
up being largely ignored by contemporary economists for a variety of
reasons. In the final analysis, however, the most significant reason for
this rejection may have been the boldness of the conclusions drawn
from such ambiguous and imprecise data as monetary and financial indicators.
These indicators, just like price tags, are a rather frivolous means of
assigning lasting value. Inflation and currency fluctuations due to speculation
or politico-economic circumstances can have a large
unpredictable effect on monetary indicators. Extreme swings have been
observed. For example, Van Gogh died poor, although each of his
paintings is worth a fortune today. The number of art works he produced
has not changed since his death; counted in dollars, however, it
has increased tremendously.
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