06 Feb Boldly into the sixth wave
There is much to suggest that we are at the beginning of a new Kondratiev cycle – in this sixth long wave of a changed economy, places are needed that give us answers to questions of the present.
At the beginning of each individual Kondratiev cycle – more on the Soviet economist below – there is a new, revolutionary technology that brings about profound changes. Within the 50 years or so that follow, there are “four seasons”: Spring brings the upswing (expansion), summer leads to the boom, fall brings a downturn (recession) and in winter the wave ebbs away in an economic trough (depression). During this time, however, the next breakthrough innovation emerges, which then leads to a new spring.
From pandemic to AI
Pandemic, wars, inflation crisis, recession – there are increasing signs that the global economy has once again bottomed out or will soon do so. According to Nikolai Kondratiev’s theory of long waves, things should now be on the up again. Biotechnology and nanotechnology, genetic engineering, nuclear fusion, renewable and resource-efficient energies, the Internet of Things and health literacy in general have already been put forward as technologies that could dominate a sixth such cycle. And then there are the perennial hot topics of robotics and artificial intelligence, the latter often with the addition of “generative”. In other words, artificial intelligence that is capable of producing something.
Regardless of what will ultimately usher in a new economic spring or has already done so, friction and frictional losses are inevitable. Political systems have become more fragile, the erosion of our democracies is preoccupying both the United States and Europe, old orders are being questioned, change and upheaval seem inevitable, unsettling large sections of the population and fueling the success of populists and extremists.
We need explainers who allay our fears and give us courage. Not for the future, the present is challenging enough for now. These explainers could be the mass media, but they are increasingly losing the mass of recipients and their loss of credibility in increasingly fragmented subpublics is too great. This has multiple causes and is partly self-inflicted. (A)social media are owned by dubious tech oligarchs who use turbo-capitalist algorithms to open the floodgates to disinformation and make our attention spans shorter and shorter. Enlightenment is definitely not their mission.
Municipal intelligence
We should therefore focus more on places where we can come together, where we can be heard and where we can exchange ideas. Places that are not virtual, but real. Places that illustrate change and make new forms of cooperation and coexistence tangible. Places that are home to cutting-edge research, life sciences and supercomputers as well as schools and public services. Places of good hope. Every country needs such places, every city, perhaps even every community. What is needed is a municipal intelligence that builds and maintains such places.
From Linz, where the Tabakfabrik is a prototypical location for the creative class, a collaborative group of creative industries, we turn our gaze eastwards to the federal capital.
Viennese will
Like many other metropolitan areas, the city is facing challenges that affect all areas of our lives. For example, if Vienna wants to take its more than 100-year pioneering role in social housing to a new level, it will need places where something like Gemeindebau 2.0 can be tested – with all aspects of coexistence between people of different origins, old and young. The same applies to enabling the steadily growing group of older people to live out their lives in dignity. This requires not only the best healthcare and social participation, but also the question of the workforce required for this and their needs should also be considered.
Technology and science play a role in these social tasks: How can medical advances in cancer research or in the field of autoimmune diseases, for example, facilitate healthy ageing? What tasks could care robots take on? But also: How do we react to the scientific skepticism of large sections of the population, how do we counter fears of technology in general? How do we turn our children and grandchildren back into optimists?
Innovation ecology
A prototypical place for answers to contemporary questions cannot be a monoculture. It has room for science and research as well as for art and culture, it is home to education and training, it focuses on social issues, it offers space for work, production – and contemplation. It creates an ecology that enables innovation in many areas, it is a laboratory as well as a stage, it is a workbench and lecture hall in equal measure. It is only through its balanced plurality, which requires visionary development and curation, that it becomes an ecosystem that creates new knowledge and new skills.
On a small scale, this ecosystem will experience exactly what Kondratjev’s “four seasons” are in the global economy: Expansion, boom, recession and depression, followed by an upswing. These innovation cycles repeat themselves and are driven by different players who take on decisive roles at different times. The selection of suitable pioneers is a crucial task in the development of such prototypical places.
Nikolai Kondratiev was only 46 years old. He spent his last eight years in prison before being sentenced to death by Stalin’s henchmen as part of the “Great Purge” on September 17, 1938 and shot on the same day.
What had the Soviet economist done?
Kondratiev’s theory, according to which capitalism would always regenerate itself after recession and depression in accordance with his cyclical model of long waves, was in clear contradiction to the prevailing doctrine of the communists. They prophesied the collapse of the capitalist system as the basis for their world revolution. Kondratiev, who was at least not averse to free-market thinking and who had even been Deputy Minister of Food before the October Revolution and for many years director of the Moscow Economic Institute, which he had founded, increasingly fell out of favor, was sentenced to prison and was not to be released until his execution.
It was not until 1987 that Kondratiev was rehabilitated by the Soviet Union. The long waves of economic activity he first described in 1926 are still popular.
From today’s perspective, Kondratiew can be used to describe five completed wave movements of the global economy: The beginning of the first wave – which lasted from around 1800 to 1850 – was caused by the invention of the steam engine, which led to the first industrial revolution – think of textile production, but also the mechanization of mining. In the second wave (1850-1910), coal replaced water as a source of energy and the production of steel began on a large scale. The railroads revolutionized transport, telegraphy communication and cement made building easier. In the third cycle, large-scale electrification takes place between 1910 and 1950, the chemical and plastics industries and the internal combustion engine in vehicle construction bring an upswing, and oil is the most important source of energy. This remains the case in the fourth and fifth waves: Between 1950 and 1990, petrochemicals, nuclear power and space travel dominate the economy; in the fifth wave (1990 to around today), information technology, telecommunications, software and hardware as well as the Internet are at the heart of a globalized world economy. It is noteworthy that at the end of each wave there were armed conflicts: from the US Civil War to the world wars of the 20th century to the wars in Kuwait, Iraq, Afghanistan and, at the end of the current cycle, in Ukraine.
