The Foundations of a Hierarchial Theory of the Long-Wave Phenomenon

Abstract

Long waves of economic development, estimated to last approximately 50 years, have been studied by such noted economists as Adelman [1], Kuznets [11; 12], Rostow [15], and Schumpeter [18]. A name recently added to the list of scholars who have studied the phenomenon alternatively referred to as Kondratieff waves, long cycles, or long waves, is van Duijn [20]. Van Duijn's primary contribution to this body of literature has been an extensive theoretical synthesis of three critical concepts-major product innovation, innovation life cycle, and infrastructure investment -into a model that endogenously explains the occurrence and recurrence of long waves. This synthesis is a significant addition to the study of the long-run economic activity, having been attempted unsuccessfully by previous long-wave theorists including Kondratieff [9; 10], Kuznets [11], and Schumpeter [18]. While van Duijn provides a theoretical framework that can be used to explain endogenously recurring long waves, a more fundamental explanation is possible. This paper presents a theoretical analysis based on four simple axioms of human behavior that offers a fundamental explanation for van Duijn's theory, and consequently provides a more fundamental explanation for the longwave phenomenon. The basic premises of this analysis, building on the earlier work of Amos and Currier [3] and Amos [2] are that 1) people are motivated through the desire to fulfill unfulfilled aspirations, and 2) aspirations are endogenously affected by the economy. Although this theory offers an important, and more fundamental, explanation for long waves, of equal importance is the widespread implications for other areas of socioeconomic behavior.