Bernard, Gervorkyan, Palley, Semmler: A Review & Critique of Long Wave Theories

In a previous post (see here), I had argued that the capitalist world economy can be conceived as resting on the dependence of historically-specific hegemonic institutions, whose rise and fall follow the trajectory of long waves, what Giovanni Arrighi defined as systemic cycles of accumulation (SCA's), periods of approximately 40-60 years, separated by A phases and B phases (see here). Lucas Bernard, Aleksandr V. Gervorkyan, Thomas I. Palley, and Willi Semmler, however, offer a penetrating critique of this central tenant of the world-systems tradition.

From the abstract:

This paper explores long wave theory, including Kondratieff’s theory of cycles in
production and relative prices; Kuznets’ theory of cycles arising from
infrastructure investments; Schumpeter`s theory of cycles due to waves of
technological innovation; Goodwin`s theory of cyclical growth based on
employment and wage share dynamics; Keynes – Kaldor – Kalecki demand and
investment oriented theories of cycles; and Minsky’s financial instability
hypothesis whereby capitalist economies show a genetic propensity to boom-bust
cycles. This literature has been out of favor for many years but recent
developments suggest a reexamination is warranted and timely. 

Read rest here.

Debt cycles, underdevelopment and debt forgiveness

Laurent Dubois argues in a very good op-ed in the NYTimes that Caribbean countries should receive reparations for slavery. It also raises the question of the responsibility for the accumulation of foreign debt, and the fact that lender countries might be the ones to blame. For example, Dubois tells us that:

"Haiti won its freedom 1804, but in 1825 it agreed to pay an indemnity to France in return for diplomatic recognition. The money was used to compensate French plantation owners.
...
In 2003, Haiti’s president, Jean-Bertrand Aristide, called on France to repay the 1825 indemnity, which he blamed for his country’s poverty. The argument was historically sound: to pay France, Haiti had had to borrow money from French banks, entering a century-long cycle of debt."

Long cycles of indebtedness have in fact reduced the ability of developing countries to grow. They reinforce the limits imposed by the external constraint, that is, the need to export enough to import the intermediary and capital goods needed for productive activities, plus the need to service the foreign debt.

More often than not developing countries (when interest rates in the center rise, or when terms of trade collapse) are forced to grow less to curtail imports and/or default given the inability to service foreign debt. Christian Suter's Debt Cycles in the World Economy provides an interesting analysis of the long debt cycles in peripheral countries based on the World Systems and Long Wave cycle theories. Ginzburg and Simonazzi provide a Sraffian framework here. My paper on long term debt cycles and economic development (written in 2005) is available here.