Technology Long Swings

  

The Kondratiev Wave is an important element of World-Systems Theory. The graphic above is taken from Andreas Goldschmidt and gives historical specifics for technological cycles. Goldschmidt's formulation allows for the idea to be tested (one of the models I always test), is partially consistent with economic Growth theory (particularly if we do not assume a functional form for exogenous disembodied technological change in the Solow-Swan Model) and I can present some examples.

• The Iranian Economy prior to 1979 and associated Tech Bubble.

World-System (1460-1540): The ESL16 Model

 

Notes

For more technical information about Dynamic Component Models (DCMS) read the Boiler Plate.

• Decline of Spain (Jstor Search)
• Economic History of Spain
• List of Spanish Monarchs

World-System (12 October 1537) Wolf Hall, Henry VIII's first Son, and the Death of Jane Seymour

 

In prior posts (here and here) I introduced a real character (John Dee) who was not in Wolf Hall but gave me the opportunity to speculate on what kinds of "future forecasts" might have been given to Henry VIII and Thomas Cromwell during the time of Wolf Hall. In this Sunday's episode of the TV Series (and in the book) Hilary Mantel  introduces a fictional character, Jenneke (pictured above) who is presented as Cromwell's illegitimate daughter (a daughter Cromwell may or may not have had). Jenneke is introduced by Hilary Mantel, at the end of Season 2, Episode 3, to probe deeper into Cromwell's personal  life and character right before his fall.

From the perspective of World-System history, the interesting events in Episode 4 are: (1) Jane Seymore finally delivers Henry VIII an heir who will become Edward VI and ensure survival of the dynasty. At the same time, Jane Seymore's death after childbirth has opened the possibility of Henry remarrying and forming new Geoplitical alliances to counter the alliance forming between France and Spain. The search for a suitable marriage partner and powerful alliance begins Cromwell's downfall.

John Dee's future forecasts for Spain (here) and France (here) don't look particularly good (I'll discuss them in a later post) and you have already seen the forecast for England (here) and the best future doesn't have anything to do with Spain or France. Keep these in mind when you are watching Episode 4: Jenneke tomorrow night.

18 April 1536: Italian Ambassador Eustace Chapuys, Ann Boleyn and Thomas Cromwell.

 

What was so important about Catherine of Aragon's marriage to Henry VIII? The marriage is typically presented as a failure due to Catherine's inability to provide Henry VIII with a son, Pope Clement VII's  unwillingness to grant  Henry VIII a divorce to find a queen who could give him an heir, the resulting English Reformation (breakaway from the Catholic Church), Catherine of Aragon's unwillingness to enter a convent, and Henry VIII's ultimate execution of the Queen. Maybe all that is enough for a TV Drama, but there were deeper issues that had to do with Geopolitical Alliances.

In the video above, Eustace Chapuys (France's ambassador England) is set up to encounter Anne Boleyn, Henry VIII's new Queen. Chapuys is reluctant to acknowledge Anne because he wants England to return to the Roman Catholic Church and become aligned with France.

 

The conflict here is that recently executed Catherine of Aragon is part of the Spanish Branch of the Habsburg Monarchy (graphic above, double click to enlarge).  Anne Boleyn, on the other hand, was English (educated in the Netherlands and France) and offered (1) no opportunity for Geopolitical Alliances and (2) was the daughter of Thomas Boleyn (later Earl of Wiltshire) that created favorites among the English Nobility. But Henry was in love with Anne Boleyn and alliances be damned.

Eventually, Chapuys and Thomas Cromwell became friends (as a result of a long discussion presented after Chapuys acknowledges Anne Boleyn). But much is potentially lost here to include the Spanish Habsburg foothold in the New World (graphic above--I live in what was once the Habsburg-Spanish Empire in the US--favored by John Dee) and Henry and Catherine's daughter, Mary I, who would go on to be Mary I Queen of England.

We know so much about Eustace Chapuys because he carried on extensive correspondence with France (one of the major attributes of a good ambassador) and he is a great character in Wolf Hall! John Dee's future forecasts for Spain (here) and France (here) don't look particularly good and you have already seen the forecast for England (here) and the best future doesn't have anything to do with Spain or France.

 

World-System (1460-1540): The WL16 Model

The Long Sixteenth Century Model (WL16) looks at the first Volume of Immanuel Wallerstein's World-System I, Capitalist Agriculture and the Origins of the European World-Economy. The model uses the Maddison Data Base and global temperature data from the IPCC to estimate a state space model (see the Measurement Matrix, below). The results are presented in the graphic above.

The first state variable, W1=(Q+N-T) is an Environmental Controller (Error Correcting Controller, ECC). The first sate variable in most 20th Century models (here) are growth components weighting all the available indicators positively. In the Long 16th Century, growth was controlled by global temperature.

The second state variable, W2=(Q+T) captures overall growth and eventual decline in production (Q) and global temperature (T). The decline starts in about 1575.

The decline in (Q+T) has been conventional called the Little Ice Age (see the graphic above from Waldinger, 2022).

The third state variable, W2=(Q-N), is the Malthusian ECC which is cyclical and hits the Malthusian crisis low point in 1600, right at the bottom of the Little Ice Age.

You can run the WL16 model here. The model is unstable due to the unstable (Q+T) component. Instructions for stabilizing the model are contained within the code. Boiler Plate can be found here.

Notes

The three state variables presented at the beginning of this pose were constructed from standardized data using the following Principal Components measurement matrix.

For more technical information about Dynamic Component Models (DCMS) read the Boiler Plate.

 

Boiler Plate

 

Notes

 Akaike Information Criterion (AIC) for alternative models shows that the RW model is a strong competitor for US Growth, at least in the short-term.

State Space Model Estimation

The Measurement Matrix for the state space models was constructed using Principal Components Analysis with standardized data from the World Development Indicators. The statistical analysis was conducted in an extension of the dse package. The package is currently supported by an online portal (here) and can be downloaded, with the R-programming language, for any personal computer here. Code for the state space Dynamic Component models (DCMs) is available on my Google drive (here) and referenced in each post.

Atlanta Fed Economy Now

My approach to forecasting is similar to the EconomyNow model used by the Atlanta Federal Reserve. Since the new Republican Administration is signaling that they would like to eliminate the Federal Reserve, the app might well not be available in the future.

While the app is still available, there have been some interesting developments. In earlier forecasts, the Atlanta Fed was showing GDP growth predictions outside the Blue Chip Consensus. Right now, after unorthodox economic policies from the Trump II Administration, the EconomyNow model is predicting a drastic drop in GDP (the Financial Forecast Center is only predicting a slight drop here).

Climate Change

Another comparison for what I have presented above are the IPCC Emission Scenarios. These scenarios are for the World System. Needless to say, (1) the new Right-Wing Republican administration plans on withdrawing the US from all attempts to study or ameliorate Climate Change and (2) the IPCC does not produce any RW modes for the World System (but seem my forecasts here).

World System

The longest running set of data we have for the World-System is the Maddison Project based on the work of Angus Maddison (more information is available here). Data on production (Q) and population (N) for most countries and regions runs from years 0-2000. More data becomes available as we near the year 2000. 

Available data were entered in a spreadsheet (see Population above, double click to enlarge). Missing data were interpolated with nonlinear spline smoothing using the R programming Language.

In cases where initial values were not available (see GDP above), the E-M Algorithm was used to estimate initial conditions.

From the graph of GDP above (W_Q) for the World System, it can be seen that economic growth from the year 0-1500 was basically flat. The period of British Capitalism (after 1500) had a small plateau of growth. Takeoff does not happen until the Nineteenth Century.

From a system's perspective, the only model that can be tested for the entire period is Kenneth Boulding's Malthusian Systems Model [Q,N] = f[Q,N].

When developed as a State Space model (measurement matrix above) there are two components: W1=Growth and W2=(Q-N), the Malthusian Controller. When more data is available, the Malthusian Controller can be generalized to other SocioEconomic theories.

What the Malthusian Controller shows (plotted as Q-N above) is that a long-developing Malthusian Crisis (Q<N) started in the Late Middle Ages and accelerated through the period of British Capitalism (Dark Satanic Mills) and was reversed spectacularly during the Nineteenth Century.  Takeoff in response to a deepening Malthusian Crisis would not be an unreasonable way to view Modern Economic Growth.

Error Correcting Controllers (ECC)

In another post (here), I presented Leibenstein's Malthusian Error Correcting Controller (ECC). It can be generalized to the dominant ECCs in most theoretical economic models (above). These controllers can be further generalized. For example, (X-U) and (L-U) can be generalized to (N-U), a more general Urbanization Controller which describes market expansion for economic growth. In countries and periods with limited data, (N-U) might subsume all these processes. ECCs describe important feedback processes in SocioTechnical System that are typically not recognized as such in academic literature.

Kaya Identity

The basic theoretical model underlying all the World-System models I crate is the Kaya Identity. There are a number of advantages to starting theoretical development with the Kaya Identity: (1) An "identity" is true by definition Adding other variables to the model ensure that theory construction is on a solid footing. (2) The Kaya Identity is also used as the foundation for the IPCC Emissions Scenarios allowing a linkage between World-Systems Theory and the work of the IPCC.

World Development Indicators (WDI)

After WWII, extensive data sets on all countries in the World-System became available from the World Bank (here). The indicators above where chose to construct the state space for each WDI-based model. Addition indicators can be added for specific forecasts and analyses.

The World-System (1460-1540): About

 

The Long 16th Century (1460-1540) was a period of history used by Ferdinand Braudel in his two volume History of the Mediterranean World.

On the World History Timeline (above), it covered the transition from Feudalism to Capitalism. The Takeoff associated with GDP in the Industrial Revolution was in the future.

I have developed state space models for the period based on the Maddison Historical Statistics. The models, written in the R programming language using the dse package are available here and can be run in the Snippets browser here.

Links

• Feudalism
• Little Ice Age
• Economic History of Spain
• Decline of Spain
• List of Spanish Monarchs
• The Economy of Spain: World's Greatest Bubble
• Decline of Spain

Periodization

For the Quantitative Historian, selecting a time period over which to display statistical data or estimate models is an interesting problem with no solution. My approach has been estimate multi-models over whatever period seems appropriate to the purple (from a decade to 2000 years). A meta-analysis of the multi-models will have to be relegated to the future.

A General Periodization based on Centuries is provided in the Boiler Plate. In general, when I'm talking about a Long "Century," I estimate based on a given Century (for example, the Twentieth Century) and then project the models into the future (for example, the Twenty-first Century).

Starting with the Twentieth Century, here are some interesting references with links where you can download the free pdf files:

• The Age of Extremes (Wikipedia Article)
• The Long Twentieth Century, Giovanni Aright 
• The Age of Extremes, The Short Twentieth Century, 1914-1991, Eric Hobsbawm
• The Age of Capital, 1848-1875, Eric Hobsbawm
• The Age of Revolution, 1789-18484, Eric Hobsbawm
• The Age of Empire, 1875-1914, Eric Hobsbawm

Notes

World-system theory (WST) has developed a new language for analyzing the historical social, economic and political development of societies based on concepts from General Systems Theory (GST). The basic GST concept is that all systems are organized in hierarchies. Applying this concept to the world system, WST find nation states organized into core, semi-peripheral and peripheral countries that create an inter-regional and transnational division of labor.

The premise about hierarcical organization, the analysis of world-system history and the adoption of other GST concepts has led to a number of conjectures. For example, the system works to the benefit of the core countries that brings in the Marxist theory of Capitalist Exploitation. Or, the role of long-swings and business cycles in creating historical conjunctures where the system changes its orientation. Or, technological changes originate in the core and are used to further exploit the peripheral countries. Or, hierarchical imbalances generate world-system conflict that reaches a peak during system conjunctures.

WST has, understandably, not pursued every insight from GST. There is more to be done, particularly in the area of quantitative systems analysis and model building. My interest in this blog is to investigate world-system conjectures using quantitative models based on GST. In another blog, I am developing Causal Macrosystems using directed graphs (structural equation models) and state-space theory, quantitative tools drawn from GST. In yet another blog (Economic Bubble Machine), I am looking at economic cycles. This blog will use the insights from those blogs to develop empirical systems models of core, semi-peripheral and peripheral countries.

The kinds of questions I will be asking of these models are:

1. Is there a difference between the structure and time-series behavior of nation states based on their position in the world system?
2. Are models for failed states different form other peripheral country models?
3. Are technological parameters and technological change different based on world-system position?
4. How are effects transmitted, if at all, from core to semi-peripheral and peripheral countries?
5. Is there a difference in how systems react to economic crises based on world-system position?
6. etc.

I have been working with GST macro models since the mid-1970's. My first macro-model was published in my dissertation Instability and Late Nineteenth Century German Development. My goal is to put together the things that I have learned in the last forty years for the next generation of model builders.