Articles

Jan. 6, 2004

Life and Times of Kondratyev

It is impossible to fully understand the Long Wave Theory without a background on Mr. K himself. For many what Kondratyev proposed was not revolutionary. In the 1920s business cycles was the excepted economic theory of the day. Thus when Kondratyev proposed a 50 year cycle he was viewed as simply trumping the cycle theorists of the day.

Kondratyev published two papers in the west. These were translated from German and published in the prestigious Quarterly Journal of Economics. The first paper published in 1921 did not deal with business cycles at all and instead discussed the need to view an economy as a dynamic. Here Kondratyev introduced the foundation of what was to become his larger theory. The second paper published in 1925 was prefaced by the first paper. Due to size and cycle theory preferences, the first part of the Long Waves paper was deleted. Such is history.

Both papers taken together dramatically change the perception of Kondratyev's work. The popularity of business cycles at the time overshadowed Kondratyev's intent, but had the positive effect of getting him published with visibility. During this period Kondratyev received a bit of global recognition traveling both in Europe and the US. He became close friends with Joseph Schumpeter an association that later benefited the visibility of his work. Joseph Schumpeter was an Austrian Economist who later made a reputation at Harvard. More on Schumpeter later.

Kondratyev was born in 1892 and educated in St. Petersburg in history and statistics. As with most personal history, the times often dictate more than a person's intent. Without the aerospace boom of the late 1960s I probably would never had become an engineer. The political turbulence in Russia at the time shaped Kondratyev's life. On graduation Kondratyev was employed by the Institute on Conjecture. Equivalent to the US Department of Agriculture the Institute was tasked with reforming Russian agriculture. Farming in Russia had historically lagged Europe. The structure of ownership discouraged improvement.

Like many feudal systems the majority of farmland was owned by very few. These landowners acted in many cases as absentee landlords and were more than happy to make narrow profits on their large holdings. Improvements were discouraged for fear the peasants running the farms would become ambitious. While Russia prided itself on freeing the serfs before the US emancipated the slaves, in truth the peasant was still tied to the land. By law, peasants could be released from their obligation only during one week of the year and often then by paying a large fee to the Landlord. In practice, the peasant was a de facto slave.

The last Tsar, Nicholas having a German wife wanted desperately to reform Russia bringing it into the 20th Century. The unrest of the Bolshevik Revolution, while led by intellectuals, was grounded in the misery of the peasants

Without broad support Lenin and Trotsky would not have carried the second revolution and gained power. Positioned in the Institute on Conjecture and charged with agricultural reform, Kondratyev's prestige grew with each change in management. Where reform was a nagging concern for the Tsar, with the first revolutionary government it became more important and with the Bolsheviks an obsession.

By the time Lenin and Trotsky had solidified Russia's borders and quelled the internal conflicts land and agricultural reform became a critical mission. I know I am candy coating the real impact of the Bolshevik Revolution but as brutal the Bolsheviks were they paled in comparison to their predecessors. Following the Bolshevik Revolution farm ownership was transferred to the peasants resulting in a massive expansion of the number of farms. Many of these farms were marginal and without modern farming procedures would not support the tenants much less provide a surplus of the rest of society.

Paralleling the change in farm ownership was the growth of industrialization. Of all the things Marx had wrong the one thing he had right was the shift in wealth and ownership as a result of industrialization. By 1921, conditions in Russia had reached crisis proportions with famine threatening. Without an agricultural bailout from the US, the new Lenin government may have collapsed in chaos. This is the point where Kondratyev and the Institute influenced history. Kondratyev organized farm collectives along the lines of US farms and pooled resources to modernize and buy equipment. The organization paid off and in a few years Russia for the first time in history became a net exporter of agricultural products.

During these years at the Institute, Kondratyev had almost unlimited resources for research. It was during this period he accumulated enough data to substantiate his theory. Given the mysticism in Russia Kondratyev wished to validate in Western societies the periodicity of boom and bust that was impossible to miss from even the most casual study of Russian history. Yet, it was not the recording of history the Bolsheviks and the times were about. Much like our 1960-70s, the 1920s was a period of great social unrest and questioning. Kondratyev went beyond observation and asked the question of what created fluctuations in all economies. The Marxists believed these fluctuations were a result of the capitalist system. Kondratyev was less sure and considered them organic. Thus his Dynamic Theory Economics.

Unfortunately Kondratyev's success and his ability to survive and thrive with changes in government left him vulnerable to Stalin. The farm organizations created by Kondratyev became a powerful political block in the Lenin / Trotsky government. When Lenin died and Trotsky was exiled Stalin wanted to consolidate political power by centralizing control over the economy. He could only do this by destroying the farm organizations Kondratyev created. Kondratyev ended up in prison where he continued to work writing a book. Just prior to his release he was re-tried and sentenced to death.