you wait 35 years for a crisis, then 2009 comes along all at once

'Kondratiev long wave' theory is getting some good press at the moment  (err... depending on what news you read). Carlota Perez is the theorist du jour. This article of her's in Open Democracy is well worth a read, and Geoff Mulgan recently cited her in this excellent long wave-ish piece in Prospect. Others are returning to Schumpeter himself to discover a non-Marxist, evolutionary approach to capitalism. I'm hoping to draw on some of this stuff in a project I'm doing for Demos on new models of the firm and ownership.

The reason for this rediscovery of Kondratiev and Schumpeter is relatively clear: the financial crisis. Economic meltdown is one thing, but institutional carnage is quite another. Recessions are healthy because they stretch people's time horizons beyond the distance of their next skiing holiday; but near-nationalisation of the banking system performs a wholly Schumpeterian (and Marxian) feat of getting people to think in terms of decades and centuries.

The Kondratiev people aren't so far from the Marxist regulation school. Both are interested in the dynamics of stability and disruption, viewing capitalism as operating via long periods of equilibrium, interspersed with moments of crises.* Both take an integrated socio-economic-political perspective, such that a capitalist settlement will involve a stable accomodation between a governmental rationale, a mode of production and a set of technologies. It's just that the Kondratiev people give priority to the technology and the Marxists to the mode of production.

I was recently reading some Chris Freeman who was a leading light in this Kondratiev tradition. He explains that he focuses on five 'semi-autonomous sub-systems': science, technology, economy, politics and culture. The claim is that these all have their own evolutionary waves of stability, interspersed by crises, but that their temporal rhythms can start to influence one another and their crises occasionally coincide, with historic consequences. Isn't this a little sociologically unsatisfactory? It seems to be a slightly more intellectual version of 'it never rains but it pours'.

Which brings me to MP's expenses. We will know that we have an actual crisis in British parliamentary democracy if the BNP win a sizeable vote in the European elections next month. Major constitutional questions will be asked and the function of established parties will be called into question. But the BNP will only really win a sizeable vote because of the recession. And in any case, the catalyst for this crisis (as with the Damian McBride affair) was the greater transparency around parliamentary behaviour. And if this government hadn't reached the end of its policy road, coming up against behavioural and cultural problems that its neo-classical tools are entirely ill-suited to, then we wouldn't be so dissatisfied with the state in general. See how crises breed? It never rains but it pours, eh?

I suspect what someone like Freeman misses, and what the MPs expenses phenomenon reveals, is the reflexivity of crises. We stimulate ourselves into crisis mode. We get hungry for additional proof of an epochal shift. The media push the boundaries of possibility. Once our time horizons have been stretched - which the financial-institutional carnage must surely claim greatest responsibility for - then people's sociological and historical imaginations come alive. It's easier to have a political-constitutional crisis during a period such as this - it strikes me that the system of party whips will soon be challenged, not for any direct causal reason, but simply because the political mood is now critical. For that matter, it's easier to have a cultural one or a technological one - witness the gravitas with which the future of newspapers is currently debated. Obama understands all this, apparently, especially in relation to global warming, which has been a disaster waiting to become a crisis for over 20 years.

On a personal level, 2009 must surely be the year to be born again, come out, emigrate, have a midlife crisis. Everyone is looking for evidence of a new era of thrift, which has no doubt arrived. But that shows the same lack of imagination as the politicians looking for a restoration of 1990s capitalism. The point, Schumpeterians endlessly hammer home, is that evolutionary systems create the future by destroying the past. The culture and psychology of crisis is to panic and experiment in equal measure, to find new crises, then panic and experiment one's way out of them in turn. It's equally frightening as it is exciting.

* It's important to note the literal meaning of the term 'crisis', which isn't necessarily negative. It simply means a moment in time in which the future of something is thrown into radical questioning. The outcome may be better or worse, but either way it will be different. Hence the concept of 'critique' - that which performs the radical questioning - or being in a 'critical' condition in hospital - the moment when a condition could go either way.

Comments

[Bruce Davis]

We used Perez in the creation of zopa - perhaps why it has benefited from the crunch as it was built for an age that was yet to come rather than to address the status quo?

[Steve Hughes]

I'd have more time for Kondratiev theory if it ever made any useful predictions, rather than just 'explaining' events after they have happened.

[Will Davies]

Maybe so, Steve, but maybe the urge to predict is out of keeping with the spirit of an evolutionary system. Surely the requirement, when crisis hits, is to imagine, not calculate.