In defence of long waves

Arthur Bough replies to Mike Macnair on the nature and prospects of contemporary capitalism

I do not understand why in his Weekly Worker article Mike Macnair presents my position as being that long waves last for 50 years (‘World politics, long waves and the decline of capitalism’, January 7). Taken as an average, the long wave lasts 54 years, but Soviet economist Nikolai Kondratiev said the period could be as short as 40 and as long as 60 years. So the argument that the theory is undermined because a fairly fixed duration implies a certain amount of mechanical thinking falls away immediately.

Kondratiev analysed actual movements in coming to this conclusion, and recognised that, precisely because the long wave results from a series of interconnecting, long-term processes, the interaction of those processes could not be precisely timed. It is also wrong to say, then, that he did not provide any causal explanation of the long wave. Also, Kondratiev based himself on more like 140 years rather than 100 years of data.

Marx looked at the possibility of such a long wave, as well as his work on the business cycle. He was particularly interested in the role played by very large capital investments such as building factories. I have set out on my blog a whole series of these features.[1] Some of these relate to the role of primary production. What is interesting, over the last cycle, is the degree to which long-wave theory was borne out by the movements of raw material prices. Whatever ‘bubbles’ arose during the downturn, from the mid-70s until 1999, it did not affect these prices, which continued to fall, and along with them investment in exploration and development. Similarly, even when interest rates have been rising since 1999, and even when states have been running budget surpluses, raw material and food prices have continued to rise sharply.

I differ from Permanent Revolution on the long wave in a number of respects. In fact, I disagree with PR’s position generally, in respect of the prominence it gives to the role of the rate of profit. My position, as with Kondratiev, relates to basic structural shifts within the capitalist economy, of which changes in the rate of profit can be a reflection, but not a necessary determinant. I do not, therefore, place the same kind of importance as does PR on the events in eastern Europe, and nor do I place the beginning of the current long-wave boom at the beginning of the 90s, but instead in 1999. Last year, as the crisis erupted, I gave some statistics to back that up, detailing changes in global economic activity:

“Between 1980 and 1990 global trade rose from around $4,000 billion to around $6,000 billion, remaining flat until around 1994. Between 1994 and 2000 it rose from around $6,000 billion to $12,000 billion. But, the sharpest rise has most notably been since 2002 where it rose from around $12,000 billion to around $28,000 billion by 2007.”[2]

In August of 2008 I predicted that the financial crisis was immediately about to erupt, and explained why. Within a couple of weeks, exactly what I had predicted happened.[3] Mike is quite correct that predicting these short-term events has little to do with Marxist analysis. I got that right because I spend a lot of time watching CNBC television, reading financial reports and listening to market chatter. That enables me to arrive at an idea of what is going on in the financial markets, and the economy generally, which I can fit into my conceptual framework.

But developing that framework is a function of having a correct Marxist methodology. And, as I wrote then, nothing in that crisis changed my view of the general economic situation we are in, which is that of a long-wave boom. Mike is right that the immediate future is of less significance, but it is his view of the bigger picture, of the era of “capitalist decline”, which I most take issue with.

A long-wave boom does not imply that severe recessions or even depressions are not possible within it. A recession lasts around five-six quarters, with output falling around 10%, while a depression, lasts for around 10 quarters, with output falling by 25%-plus. The long-wave downturn that Kondratiev recognised as beginning in 1914-20 led to a period of slow growth, outside the US, during the 1920s, but there was no depression in the 1920s. This recession lasted for just four quarters. Of course, you can argue there will be a double dip and we will see who is right.

Even if the current situation were to become a depression, we would be talking about a period of 40 months’ serious dislocation out of a period of boom lasting 20-30 years! It would have serious short-term consequences, but one consequence would be that, when it ended, the clear-out of inefficient capital it would bring with it would result in an even more vibrant recovery.

It is the bigger picture that is more important here, and something that revolutionaries failed to understand when the economic conjuncture changed after 1914. They believed that the kind of workers’ advance that accompanied the long-wave boom from the late 1880s to 1914 would continue even when the fundamental economic conditions that gave rise to it had reversed. Revolutionaries are in danger of making a similar mistake now, but in the opposite direction.

I agree with comrade Macnair that the general catastrophism of much of the left is absurd. The revolutionary situations this left hopes for do not occur during periods of long-wave downturn, but at the point of conjuncture between the end of the boom and the commencement of the downturn. It is at this point that the workers’ militancy, organisation and class-consciousness built up during the boom is at its height, but capital can no longer continue to make concessions. Workers have to turn from simple industrial struggle and reformism to more radical political solutions. Hobsbawm, in Industry and Empire, noted this same pattern in respect of long-wave rises and falls in the 19th century.

But what is also clear is that if the working class does not succeed in imposing itself, during this conjunctural period, then the force of material conditions imposes itself on both the workers’ organisation and their consciousness. From the 1920s on, workers in Europe were on the back foot. From the 1980s onwards workers globally were on the back foot.


I am not convinced by comrade Macnair’s arguments that capitalism is in decline. I have more to say on this than there is room for here, and I will write a larger response on my blog.

Marxists usually base talk about a mode of production being in decline on whether it continues to raise the level of productivity or whether it has hit some necessary barrier to doing so. Mike provides no evidence that this is the case. A simple look at the world around us shows why. Since World War II, capitalism has revolutionised production even more than it did during the industrial revolution. It is doing so during the current period at an even greater pace. To claim that all we are seeing is a cheapening of products, due to low Chinese wages, flies in the face of all the evidence we have of the role of robotisation, of IT and of the microchip in general.

He questions whether there has been any real increase in global production, but the simple evidence of our eyes is enough to demonstrate it. Even compared with 1999, there is not only consumption of more of the things we were consuming then, but the additional consumption of vast ranges of use-values that simply did not exist then. In China, millions of new workers have been created, who now have an urban lifestyle, consuming vast quantities of these use-values. More than 30% of China’s production goes to its home market. China has already surpassed the US to become the world’s largest car market, and at the rate that Chinese living standards are rising, it will soon be the biggest market for pretty much everything else. It is not low wages that explains that, but actual production of all those use-values.

Mike’s comments about unemployment are puzzling. He repeats the allegations of the Tory press about people on incapacity benefit not being sick. The fact is that there are advantages for the state in having people on job seeker’s allowance rather than incapacity benefit, and repeated attempts to tighten qualification for IB have all failed to reduce numbers significantly. Whilst pointing to such “hidden unemployment”, as proof that the economy is not really growing, he fails to mention that more than two million workers had to be imported into this economy to fill vacancies! Nor were these all the low-paid, low-status jobs he refers to.

Not long ago, before Polish plumbers arrived, the media was running stories about teachers giving up their jobs to earn much more as a plumber or another skilled job. Many have come in as nurses, who now will require a degree qualification. Whilst there has been a growth of “burger-flippers”, a look at the City shows a huge growth in high-valued labour too. Similarly, a look at the explosion of science parks around the country’s increasing number of universities demonstrates a similar increase in demand for complex labour.

As I have demonstrated, these types of employment, using complex labour, act to raise the rate of profit.[4] As Britain, the US and other developed economies move even more to a high-tech economy, such jobs will increase even more. In part, this process has been held back, precisely because of the means by which the US and UK dealt with the period of decline.[5] In the US in particular, the power of huge monopolies like General Motors meant that the process of deindustrialisation and globalisation did not take place as thoroughly as it might have done. That is why disproportions arose that have left pockets of overcapacity in some of these old industries where the rate of profit is low rather than that capital being invested in new, high-profit-rate industries. But the current crisis has forced that process onwards, as the bankruptcy and restructuring of GM, etc demonstrated.

Nor is it clear why Mike thinks that any new global upswing is dependent upon the US losing its position as the leading global military power. In the 19th century (and into the 20th) Britain remained by far the leading military power, but its economic supremacy had disappeared by the last quarter of the 19th century. That military supremacy did not prevent the long-wave boom of that period, nor even the grab for colonies. What really brought the question of military power into question was, in fact, the end of that long-wave boom - the end of the conditions which allowed inter-capitalist rivalry to remain within the context of economic competition.

We see an almost identical situation today: although the US is developing its global military strategy (its move into the ‘-stans’ of central Asia, etc) and although China is building up its military capability, competition remains at the economic level of who can buy up access to resources in Latin America, Asia and increasingly Africa. As with the period at the end of the 19th century, that is possible so long as economic activity, and the global amount of surplus value, continues to rise substantially. Once that ends, those relations can only be achieved through military and political power. That is why I believe that the conjuncture at the end of this long-wave boom is crucial to man’s continued existence, and why the period up to then is crucial for Marxists to prepare the working class accordingly.[6]

Comrade Macnair’s argument seems to speak against the point he is trying to make. He refers to the profits of the financial sector, and to the unproductive sector of the economy, whilst questioning whether the rate of profit in the productive sector has risen. But, as he says, the profits of the unproductive sector of the economy only arise because they share in the total surplus value created in the productive sector. By that token, if this unproductive sector had not drained such a large amount of surplus value, then the rate of profit in the productive sector would have been that much greater!

Rising role?

Comrade Macnair talks about defining the declining role of a mode of production in terms of the rising role that a new mode of production assumes: eg, how capitalism gradually grew within feudalism. But, in that case, he should demonstrate how capitalism’s decline is being mirrored by a rise of ‘socialistic’ production. He does no such thing.

I have referred in the past to the fact that we see a cycle of growth of cooperatives in a spurt every 20 years.[7] I have not compared that cycle to the long-wave cycle, but it would not be too much of a stretch to see the secular rise of the cooperative sector over the last 100 years or so as being related, as in the example he refers to of the growth and continuation of the Argentinean co-ops. This suggests that workers do tend to respond automatically to the economic crises of capital during such periods by looking towards ‘socialistic’ production.

But we have to be careful here. Capitalism developed rapidly because it was able to utilise an existing individualism - every peasant is a potential capitalist. The drive to increase individual wealth provides a straightforward incentive to accumulate capital. That is not true of cooperative production. It is not immediately apparent that each individual worker can advance their position by cooperating with other workers. On the contrary, the very working of capitalism infuses the opposite mentality into the workers’ consciousness. That is why even fusing workers together into effective trade unions is fraught with problems.

It tends only to be when workers face some immediate crisis, such as the closure of their plant, that they look to such an option as a cooperative. This tends to be the worst of all times to do so and if things remain at that, all that results is a capitalist enterprise owned by workers.

In fact, the development of this ‘socialistic’ mode of production within capitalism can only arise on the basis of a conscious effort by workers collectively to develop it - and that requires the lead and organisation of a mass workers party to bring it about, in the way that Marx and the First International sought to do.


  1. boffyblog.blogspot.com/2008/06/kondratievs-long-waves.html.
  2. World Trade Organisation Thomson Datastream.
  3. boffyblog.blogspot.com/2008/07/severe-financial-warning.html.
  4. boffyblog.blogspot.com/2007/12/tendency-for-rate-of-profit-to-rise.html.
  5. boffyblog.blogspot.com/2009/03/crisis-out-of-all-disproportion.html.
  6. boffyblog.blogspot.com/2008/08/third-world-war.html.
  7. boffyblog.blogspot.com/2009/03/co-op-facts.html.