Oct 24 2011
Slow Recovery Fits 200-Year Pattern
This Op-Ed is by Bruce Cordell and Euel Elliott
The fall of 2011 would hardly seem the time to be discussing a near-term return to prosperity. Yet despite the worst economic and financial morass since the Great Depression, including a possible double-dip recession, history suggests that the U.S. and indeed, the world may be approaching a tipping point: the beginning of another 1960s-style sustained period of economic growth, part of a recurring cycle of economic prosperity and decline that has manifested itself over more than 200 years.
For example, economists at Standard Chartered Bank frame their analysis in terms of “Super-Cyles” that they document back to 1820. They predict that a period of extended global growth that actually started in 2000, albeit interrupted in the developed world by the current economic and financial crises, will continue into the 2020s.
These twice-per-century periods of rapid growth – also consistent with nuclear physicist Hugh B. Stewart’s well-documented (back to 1840) 56-year societal energy use cycle — are a hallmark of what we refer to as “Maslow Windows.” Based upon the work of the social psychologist Abraham Maslow, who closely studied the needs and motivations of humans, Maslow Windows are periods of unusual optimism (“ebullience”) triggered by sustained, rapid economic growth. During these periods, as many ascend Maslow’s hierarchy and their worldviews momentarily expand, a strong “can-do” spirit is characterized by the desire for unprecedented exploration and the building of great infrastructure projects.
Previous expansive eras associated with Maslow Windows include the exploration of the vast North American continent in the early 1800s by Lewis and Clark, “Manifest Destiny” and transcontinental railroads of the mid-19th century, the Panama Canal “fever” and “pole mania” in the early 20th century, and most recently, the 1960s U.S. – Soviet “Space Race” culminating in the first lunar landing in July 1969.
In fact, our current lingering recession/weak recovery is similar to typical precursors of transformative booms over the last 200+ years. With one exception, each prior boom that opened a Maslow Window was characterized by weak growth and profound pessimism just prior to the upswing. (The 1950s did not experience a financial panic/great recession probably because of the post-WW II expansion and financial reforms dating back to the Great Depression.)
However, the Panic of 2008 suggests we have returned to the 200-year-old pattern of financial panic/great recession pairs followed by a JFK-style economic boom. Indeed, we expect a new, transformative Maslow Window to arrive by mid-decade.
For example, the financial Panic of 1893 – with parallels to the Panic of 2008 — signaled the impending arrival of the next Maslow Window. It caused unemployment over 10% for over 5 years. The crisis initially lasted only 18 months but was followed by another (double-dip) recession that continued into 1897.
According to Hugh Rockoff of Rutgers, “I think the analogy between the 1890s and today is better than the analogy with the Great Depression … One of the many similarities is the real estate crisis. There was a subprime mortgage problem in the 1890s that was very similar to what precipitated the recent crisis,” (RealClearPolitics.com; S. Zito, 9/18/11).
The Panic of 1893 began about 6 years before its recovery generated a JFK-style economic boom that triggered the early 20th century Maslow Window. A similar pattern now would suggest that the global economy should recover to its mid-2007 “greatest ever global boom” status by 2015.
The early 20th century Peary/Panama Maslow Window (1901-13) included the internationally contested polar expeditions, the greatest macro-engineering project of the last 200 years (until Apollo) — the Panama Canal, the Wright Brothers’ first flights, the Great White Fleet’s global voyage, and President Theodore Roosevelt. This was perhaps the most ebullient period in U.S. history.
This eerily repetitive pattern – a financial panic/great recession followed by a major boom that ignites the Maslow Window — began with the post-Revolutionary War “depression” of 1784-88 and the 1790s major boom which led to the extraordinary Louisiana Purchase and Lewis and Clark. It repeated during the Panic of 1837 — a major contraction when 40% of the U.S. banks failed and unemployment was at record highs — that lasted 6 years and led to the mid-1840s major boom, which triggered the Age of Manifest Destiny via James Polk.
The multi-century patterns sketched above suggest that our current weak recovery is signaling the impending arrival of a new Maslow Window by mid-decade. We expect that it will be driven by advances in biotechnology, information technology, artificial intelligence, green technologies, and others.
The coming boom will be enhanced by a new international Space Age. In addition to the Apollo Moon program, the 1960s Maslow Window included the 1962 Cuban Missile Crisis, so the road ahead may be bumpy. But as the complex international system continues to self-organize into a Maslow-style “critical state,” we expect to see unprecedented commercial and scientific development of the Earth-Moon system, including Moon bases, as well as possibly even humans to Mars by 2025.
We expect that during the next year or so the political realignment that began in 2008 will continue to set the stage for a renewed burst of economic and social dynamism by mid-decade.
Dr. Elliott is professor of public policy and political economy at the University of Texas at Dallas, and co-author of Money (2007).