1

Money and Sustainability: Appendix G

In 1926, Nicolai Kondratieff (1892-1938), at that

time the head of Russia’s Economic Research

Institute in Moscow, published a technical paper

in a German statistical journal documenting the

discovery of a 60-year ‘long wave’ in modern economies,

starting in the eighteenth century. 1 On this basis, he forecast a

depression period for the 1930s, at the completion of the third

Kondratieff wave. Although a communist himself, he opposed

the Stalinist elimination of the market mechanism, resulting in

him being sent to Siberia and executed for ‘anticommunist

agitation’.2 Joseph Schumpeter, and Nobel laureates Simon

Kuznets and Jan Tinbergen have substantiated the validity of

Kondratieff’s findings. It has also become clear that the

Kondratieff cycle is not just an economic phenomenon, but is

driven by technological and societal shifts. Figure 7.2

represents schematically the five waves already experienced so

far, as well as the sixth, expected to play out over the next

decades.3 Each long wave relates to a technological breakthrough called a ‘core innovation’

initially working itself through the economy as a powerful growth carrier. As its effect on the

economy wears out, an economic downturn occurs and the impact of the next core innovation

begins to manifest.

1 Kondratieff, N. “Die langen Wellen der Konjunktur” Archiv für Socialwissenschaft und Socialpolitik 1926.

2 Harry Maier, “Wellen des Fortschritts”, Die Zeit, 19 March 1993.

3 Nefiodow (2001) p.133.

Kondratieff and the ‘Long Wave’

2

Starting around 1800, the first Kondratieff wave was triggered by the steam engine and textile

machinery automation and bottomed out around 1850. The second wave relates to steel and

railroads shortly followed ending in 1890 and so on. (See Figure G.1.)

Leo Nefiodow, one of today’s foremost researchers on the long cycle, forecasted the peaking-off of

the fifth Kondratieff wave, related to Information Technologies, during the late 1990s.4 This

occurred in Asia by the mid-1990s, and in Europe and the US a few years later. In 2006, the same

author published his forecast for the sixth Kondratieff wave, which will take place during the first

decades of the twenty-first century.5 He reports four findings that are directly relevant for Wellness

Tokens. (Wellness Tokens are discussed at length in Chapter VII of Money and Sustainability: The

Missing Link.)

First, the next wave will be based on what he calls ‘psychosocial technologies’, or individual,

community and environmental healing processes. The difference of this sixth wave compared to

the previous five is that for the first time, the core technology would not primarily be rooted in the

material and quantitative realms. Social and qualitative change in human and environmental

conditions would predominate instead.

Second, the best way for a country to reduce the pain of the transition from any one of the waves

to the next is to invest early in the next wave’s core technologies. This will ensure that new

workplaces are created in markets created by the new wave, while jobs in the markets of the old

wave are scaled down. Similarly, private investment in core technologies of this transition will

allow one to be ‘carried by the wave’. It is analogous to investing, for instance, in railroads and

steel in the 1850s, in Ford Motor Company or GM in 1935 or in IBM and Microsoft in 1980.

Third, a new wave always integrates the strengths of the old one as a tool for its transformation: in

our case, this means that the sixth wave will build on the information technologies of the fifth one.

Finally, the skills that most need development for this specific sixth wave are those of cooperation

and interpersonal communication.

If Nefiodow is right, the best areas to invest in today are the technologies supporting the move

towards ‘integral wellness’ thanks to ‘psychosocial health’ technologies. Wellness Tokens are one

way to achieve this. They are taking advantage of the new means developed during the Fifth Wave

through IT and mobile phone technologies. And they address an issue that is otherwise doomed to

grow predictably to unprecedented levels over the next decades.

4 Nefiodow (1991) and (1994).

5 Nefiodow (2001)

3

Figure G.1: The six Kondratieff cycles, their corresponding ‘core technologies’ and the societal domain in

which they predominantly express themselves. The sixth Kondratieff wave, the one that will be driven by

technologies providing ‘Integral Wellness’, is expected to become dominant during the first decades of the

twenty-first century. 6

This is Appendix G to

Money and Sustainability: The Missing Link. To read more about the book or to order a copy, visit:

http://bit.ly/TPMissingLink

6 Each wave is generated through the interaction of the previous wave with the next wave. The dates marked at the

bottom of each wave correspond in reality to the end of the previous Kondratieff wave, not the beginning of the

next wave. Nefiodow (2001) p.xxx.