May 19, 2020
A Covid-19 vaccine, or lack thereof, will have zero effect in terms of reversing these cycles. Call it Fate, call it karma, call it what you will, but the cycles have aligned and nothing can stop the unraveling of all that was foolishly presumed to be permanent.
We like to think we’re in charge and that technology conquers all, but history moves in cycles that are larger than any person, corporation, elite or (gasp) technology. My first version of the chart below was drawn in 2008, when the Global Financial Meltdown revealed the cracks in the happy-story facade of permanent wonderfulness based on the amazing magic of borrowing / printing ever greater sums of currency, a.k.a. “money.”
Longtime correspondent Cheryl A. suggested I revisit the alignment of long-wave cycles, and so let’s start by what the study of cycles is not: it is predictive in terms of trends and turning points, not precise time or amplitude targets. In effect, the study of cycles is the study of human nature as it plays out in long-term social, political and economic dynamics.
Sir John Glubb’s succinct and deeply informed 1978 essay The Fate of Empires lists these stages of social development and decay that manifest as the rise and decline of empires:
The Age of Pioneers (outburst or Boost Phase)
The Age of Conquests
The Age of Commerce
The Age of Affluence
The Age of Intellect
The Age of Decadence
The slippery slope to collapse–decadence–is characterized by greed, corruption, irreconcilable internal political rifts, moral decay, frivolity, materialism–hmm, sound familiar?
The global status quo sped through The Age of Intellect (postmodernism) with little to show for the vast expenditure of resources, and is now firmly in the final terminal stage of decadence and collapse.
All of this fits the S-Curve model which I’ve described here many times, for example:
As I discussed a few months ago in The Taxonomy of Collapse (December 9, 2019), any number of events or trend reversals can trigger the rapid decline and collapse of what was widely viewed as permanent.
The book The Fate of Rome: Climate, Disease, and the End of an Empire makes a compelling case that the Western Roman Empire centered around the Mediterranean suffered from a slow environmental transition from an unusually wet era that enabled grain to be grown in previously marginal areas to a drier era that no longer supported the immense grain harvests needed to feed the empire.
The imperial machinery accustomed to there’s always more somewhere refuses to trim its expenses, elites refuse to lessen their skim, and since the fat of elite excess is retained, eventually the muscle of military power and trade decay, leaving a hollowed out empire on the edge of a precipice awaiting one final kick into the abyss.
The Covid-19 pandemic is the final kick into the abyss. Triggers of collapse can overlap, of course, accelerating the final decline, and hence our interest in long-wave cycles that align in the present era.
All complex, tightly bound systems are intrinsically fragile and prone to disruption; we don’t see the fragility or vulnerabilities until the decline has reached the terminal phase.
The higher up the wealth-power pyramid the observer is, the more prone they are to a magical-thinking belief that the status quo is forever, even as it is crumbling around them. I discussed this earlier this month in Our Inevitable Collapse: We Can’t Save a Fragile Economy With Bailouts That Increase Fragility (May 1, 2020).
Let’s consider the four overlapping/aligning cycles depicted on this chart. I could have added more, for example Glubb’s cycle of imperial expansion and decline, or Peter Turchin’s cycle of social integration and disintegration which he explained in his 2016 book Ages of Discord: human history manifests cycles of social disintegration and integration in which the impulse to cooperate in large social structures waxes and wanes.
Turchin identified 25-year cycles that combine into roughly 50-year cycles, comparable (though not identical with) Kondratieff’s economic cycles.
These 50-year cycles are part of longer 150 to 200-year cycles that move from cooperation through an age of discord and disintegration to a new era of cooperation.
This work draws upon his previous books, including War and Peace and War: The Rise and Fall of Empires, which I referenced in Following in Ancient Rome’s Footsteps: Moral Decay, Rising Wealth Inequality (September 30, 2015) and The Lesson of Empires: Once Privilege Limits Social Mobility, Collapse Is Inevitable (April 18, 2016).
These long cycles parallel the cyclical analysis of David Hackett Fischer, whose masterwork The Great Wave: Price Revolutions and the Rhythm of History I’ve referenced many times over the years, most recently in We’ve Entered an Era of Rising Instability and Uncertainty (July 18, 2016).
Turchin’s model identifies three primary forces in these cycles:
1. An over-supply of labor that suppresses real (inflation-adjusted) wages
2. An overproduction of parasitic Elites
3. A deterioration in central state finances (over-indebtedness, decline in tax revenues, increase in state dependents, fiscal burdens of war, etc.)
These combine to influence the social order, which is characterized in eras of discord by declining loyalty to self-serving special interests (disintegration).
The four cycles depicted are:
1. The cycle of credit expansion and contraction, which is now in the final blow-off stage of unsustainable credit expansion (bubble) which will inevitably lead to renunciation of debt (credit collapse) and global depression.
2. The generational cycle (4 generations or approximately 80 years) of American history which leads to nation-changing social, political and economic upheaval (The American Revolution: 1781 +80 years = Civil War, 1861 +80 years = 1941, World War II + 80 years = 2021) as described in the book The Fourth Turning.
3. The 100+ year cycle of price inflation and stagnation of wages’ purchasing-power which began around 1901 is now reaching the final stage of widespread turmoil, shortages, famine, conflict and crisis. (This can be viewed as aligned with Turchin’s cycle of social disorder and disintegration.)
4. The demographic cycle: the workforce stops expanding and starts shrinking while the population of dependent elderly explodes higher, triggering a decline in earnings and the tax base just as taxes must increase to pay for the care of the rising population of elderly. (This is one dynamic in Turchin’s deterioration in central state finances.)
All of these cycles aligned around the Global Financial Meltdown of 2008-09, and elites have done nothing but kick the can down the road for over a decade in an ad-hoc explosion of TINA (there is no alternative). Nothing that’s broken has been fixed; all that’s been done is trillions in currency has been borrowed or printed to paper over the dissolution, decay and decline.
— The demographic cycle has only accelerated.
— The expansion of credit has now reached extremes no one thought possible, much less necessary, just 15 years ago.
— The generational cycle is playing out perfectly, with Trump, Brexit, Yellow Vests, etc. all erupting a few years before the terminal crisis begins in 2021.
— Asset inflation has exploded higher since the late 1990s in one asset class after another until now it’s the Everything Bubble. Despite official claims of low inflation, the costs of healthcare, childcare, higher education, rent and other essentials has skyrocketed in the past decade, and the cost of tradable goods is now beginning to accelerate as globalization and financialization unravel long supply chains and zombie corporations.
Resource depletion and geopolitical conflicts could create scarcities that the status quo has long dismissed as “impossible”–scarcities that could push prices for necessities through the roof.
The future won’t be as placid, secure and predictable as the status quo would have you believe. A Covid-19 vaccine, or lack thereof, will have zero effect in terms of reversing these cycles. Call it Fate, call it karma, call it what you will, but the cycles have aligned and nothing can stop the unraveling of all that was foolishly presumed to be permanent.
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