World War, Economy and Kondratiev Waves

Fotini Mastroianni

Nikolai Kondratiev was a Russian economist who was executed by Stalin in 1938 because he was opposed to the collectivization of the earth and because he claimed that capitalism would always return and will never die.

Kondratiev became known for his famous waves that last 50-60 years and which consist of the expansion, the crisis and the contraction upon which capitalism is renewed.

According to analysts around 2020, in the recovery of the fifth Kondratiev wave, the beginning of a new world war is estimated. The reasons for this war will be the intense competition mainly on raw materials and markets as well as on the multipolar distribution of military power among big countries. New forces will create a new hegemony.

Some researchers (Chase-Dunn and Podobnik, 1999) argue that the European Union led by Germany, with a 50/50 chance, will be involved in a global military controversy with the US in 2020, or the other possibility is the US- Japanese war. While Wallerstein (2000) argued that a war between Europe and Asia in the 21st century was most likely. Goldstein (2005) estimates the existence of war in 2025, while Boswell (1999) estimates it for the years 2010-2020.

It is a fact, however, that the conditions that have been shaped and are still shaped bring the Western world and mostly Europe, under constant pressure at all levels.

China and India are now emerging giants demographically but also economically, possibly also military, while the population in the West shrinks. Migration was thought to solve the demographic problem of the West and the problems in the pension system and will boost the economy through the market and real estate growth.

However, it has not been taken into account that in the downfall phase of the Kondratiev cycle like the one we are experiencing, which is characterized by shrinking jobs, there will be massive groups of unemployed (both locals and immigrants). Public budget will be burdened since the benefits given are much higher than the taxes paid. In addition, continuous automation causes further jobs shrinking and, therefore, redundant “working hands”, while through telecommunication the transfer of skills and knowledge is now very easy and fast so there is no need for “local working hands”.

Regarding the birth rate, newcomers in one country and their children have been shown to have birth rates lower than those of the natives (observed in Canada and in Greece with the entry of Albanian immigrants). The demographic problem in the West stems from the problems faced by the modern woman and has to do with both economic insecurity and non-protection of motherhood by the state (nurseries, maternity leave, etc.) and the instability of modern relationships (see divorce increase). On the other hand, the working environment is negative for motherhood. A population that is renewed and age distribution is smooth can bring some smoothness to the fall (winter) stage of Kondratiev cycles, and this goal can be achieved if there is a balance between personal and professional lives of women and young people in general.

Another solution to avoid the significant impact of the Kondratiev winter cycle is surplus capital of the rich countries to be invested in poor countries so as to contribute substantially to their development and economic growth.

Fotini Mastroianni

Maybe this way, it will be possible to avoid the world war predicted by analysts, which will be devastating to humanity.

Recommended Readings

Chase-Dunn C., Podobnik B. 1995. The Next World War: World-System Cycles and Trends. Journal of World-Systems Research 1/6: 1–47.Goldstein J. 1988. Long Cycles: Prosperity and War in the Modern Age. New Haven, CT: Yale University Press.Wallerstein I. 1984. Economic Cycles and Socialist Policies. Futures 16/6: 579– 585.

Internet sources

https://canadianfinanceblog.com/the-kondratieff-wave-tracking-the-past-or-predicting-the-future/#
http://www.johnbudden.com/wp-content/uploads/2016/04/OPTIMUM-ONLINE-SPRING-2016-CAN-KONDRATIEFF-CYCLES-GUIDE-US.pdf
http://wsarch.ucr.edu/archive/papers/c-d&hall/warprop.htm
http://escholarship.org/uc/item/9jv108xp#page-2

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The Salt March – Economy, Identity and Collective Action

Fotini Mastroianni

Some may wonder why many economists are interested in scientific fields  such as social psychology, sociology, anthropology and philosophy. This preoccupation, however, is not something new.

The convergence of sciences helps us to understand decision-making and to implement a more comprehensive strategy in the economy. A series of articles show the involvement of economics with other disciplines among them the studies of George Akerloff, a Nobel Prize-winning economist.

In his study “Economics and Identity”, Akerlof has raised the issue of identity in economic analysis by integrating it into a behavioral model and demonstrating that identity can affect economic outcomes. He has studied gender segregation in the labor market, the distribution of work in the household and the finances of social exclusion and poverty.

He has argued that identity can explain why some people behave in a catastrophic way. The reason is they want to save a reduced self-esteem. It would be interesting to make a combinational thought at this point. In my previous articles, I was referring to an internalized cultural and ethnic inferiority that, in combination with the identity of Akerlof, is likely to be one of the reasons why political leaders, especially in countries under crisis, are constantly taking decisions about the economy that are devastating to the vast majority of the population. Surely, it would be interesting to explore more deeply this hypothesis.

At this point, the issue of collective action and identity should be examined. Corresponding  literature states that individuals are not encouraged to engage in collective action if there are circumstances where there are collective benefits but there are also individual costs. Especially in colonial and occupation conditions, the leaders of an independence movement must present a purpose that deserves to be served, but at the same time they must provide individuals with additional personal motivations that increase reputation. Identity based on ethnicity and the subsequent creation of national capital is very effective.

The income gap between the colonial and the occupied causes cognitive dissonance. Cognitive dissonance exists when an individual’s beliefs are  overturned.
Since the colonial and the occupied as nations can not compete so as to have some  balance, only large-scale strategic peaceful collective actions under a dedicated leadership can overthrow the difficult situation of the occupied.

An example of a large-scale collective action was Gandhi’s salt march. “In 1930, Gandhi pioneered the well-known Salt March, “in which thousands of Indians walked nearly 200 miles to the sea as a protest for Britain’s monopoly on  salt. His role in this incident once again led to his arrest and imprisonment by the British, who hoped that in this way they would suppress the wave of protest caused by Gandhi’s  initiative. In contrast, Gandhi’s imprisonment has caused  further reactions by the British colonizers who eventually had to liberate him and, after having talked with him,  they have, to some extent, relaxed the relevant regulations concerning the production of salt “(Christodoulides, 2012).

Fotini Mastroianni

According to Akerlof, identity is a new type of externality. Externality is the effect of the actions of one or more individuals on the prosperity of another person or others. The impact of economic decisions is therefore extremely important for prosperity. But as it is  seen, the question that arises is whether these decisions will aim to overthrow the existing economic subordination and social unhappiness or there will be decisions that subvert this status but  presuppose the creation of collectivity, national identity and common purpose.

Low Salaries as a Factor of Attracting Investments – Another one Myth

Fotini Mastroianni

An argument that is prevailing in foreign investment discussion in Greece (and not only in Greece) is that labor costs are quite high (!) and therefore, they are deterrent to attracting foreign investment. In many cases, it is assumed that high labor cost may be the main obstacle to attracting foreign investment, possibly along with high taxation. The reality, however, denies this claim and makes it one of the myths with neoliberal origin.

The factors for attracting foreign investment are not just labor costs. Market size, extroversion, productivity, political risk, growth, and taxation, along with labor costs, are key factors in attracting foreign investment.

Let’s see, what many researchers say about high labor costs. Generally, labor costs are seen as one of the most controversial factors for attracting foreign investment. Studies on the impact of wages on attracting investment are few and there is no agreement among researchers. Some argue that higher wages discourage foreign investment and some do not. Tsai (1994) concluded that high wages had a deterrent effect in the period 1983-1986 but not in the period 1975-1978.

Labor costs can be an important factor for some labor-intensive industries. At this point, one has to take into account the competition from developing countries that offer ample labor force to investors at low cost, however,  investors are not just interested in the cost. Greece’s labor costs are the lowest in the EU-15, but it is seen, this fact has not helped the country to increase foreign investment. The reason is that investors are more interested in education/training, skills, and productivity rather than labor costs (OECD, 1996).

According to a research conducted by Hatem (1997) to multinational managers and international trade experts on the hierarchy of thirteen criteria for foreign investment, labor cost ranked 9th among foreign investment attractors while “political and social stability”  and the “quality of work” took the fourth and fifth place respectively.

Labor standards can improve these two factors, in the long run, they can even remove the negative effects of labor costs on attracting foreign investment. These standards include equal education rights for girls and boys because equivalence in education improves quality in education for future generations. Equality in labor rights among men and women is equally important for the human capital available to foreign investors. Equity in rights provides a sense of fairness for employees and thus increases productivity and improves work quality.

Labor cost should be considered within a country’s broader development framework based on its strategic planning, which should assess the role that labor cost will have in attracting foreign investment and, generally, the role that foreign investment will play in the overall growth of the economy. There are, however, other ways for an economy to compete rather than weakening labor rights, for example, an economy can increase its productivity by improving technology. At this point, it should be noted that an increase in productivity is suggested which is doubtful if low salaried employees can achieve it, on the contrary.

Ηigh salaries/wages do not constitute a problem for a country’s competitiveness once the country is able to “produce” high technology and its citizens can “absorb” new technologies.

However, the questions remain.

Fotini Mastroianni

What is a country’s national strategy for competitiveness and attracting investment?
Why such a persistence in reducing labor costs when it has been proven that this does not only shrink purchasing demand but is also not an important factor in attracting foreign investment?
What kind of investment does a country want. Does it want an investment that requires cheap labor, thus competing with the developing countries of Africa and Asia? Or does it want investment that requires highly trained and productive workforce?

References

Agiomirgianakis, G., Asteriou, D., & Papathoma, K. (2003), “The Determinants of Foreign Direct Investment: A Panel Data Study for the OECD Countries.” http://www.city. ac.uk/economics/ dps/discussion_papers/0306.pdf.

Hatem, F. (1997), International Investment: Towards the Year 2001. United Nations, New York.

ODI (1997), “Foreign Direct Investment Flows to Low-Income Countries: A Review of the Evidence.” http://www.odi.org.uk/publications/briefing/3_97.html.

OECD. (1996), Trade, Employment and Labour Standards: A Study of Core Workers’ Rights and International Trade. Paris: OECD.

Tsai, P. (1994), “Determinants of Foreign Direct Investment and its Impact on Economic Growth.” Journal of Economic Development, 19(1), pp. 137-163.

Velde, D.W, and Morrissey (2004), “Foreign Direct Investment, Skills and Wage Inequality in East Asia” in Journal of the Asia Pacific Economy, Vol. 9, No. 3, pp. 348-369(22).

 

The Illusion of the American Dream

Fotini Mastroianni

The permanent message of mass media in Greece is the glorification of the neo-liberal economic model which supports that  the concentration of wealth in the hands of the rich people will be spread to the lower classes and thus create wealth for the whole society. But is that the case?

The USA  is a global superpower and has become the economic model for many countries. However,  many are unaware of the consequences of USA’s economic power for its own population, and in particular for the middle and working class.

In the USA, the winners are the very rich, while the other social classes belong to the losers. In particular, for the period 1979-2006, the working-class income rose only 10% (in 27 years) while the middle class increased by 21%. 21% is not as good as it may seem because one has to take into account the smallest number of members that the American households,  therefore, the income per person seems to be  greater than it actually is. In fact, middle-class income rose by only 0.7% per year. At this point it should be borne in mind that the middle class is working much longer hours nowadays compared to  the end of the 1970s. Without these extra hours, the increase in US household income would be negligible. Respectively, the increase in income of the rich for the same period increased by 260%.

Regarding pensions, the middle class and working class are in a worse state. Employees  are increasingly burdened with the cost of their retirement, and the state-guaranteed pension is only for a few. Pensions are based on participation patterns like 401K where Americans put their savings. These schemes invest in mutual funds but may also include equities, bonds, etc. We can realize the  impact on pensions  that a fall of the  stock market could have, such as in 2007 and 2008, as well as the one that is predicted for the near future. As a result, many Americans run the risk of having little or no income in their pensionable years.

Futhermore, medical costs are another way to squeeze the income of the middle class and the working class because they have to  bear the insurance cost While employees spend too much on medical coverage ($ 7,290 per person in 2007 and 12,872 in 2018), the state has less doctors, nurses and hospitals per individual  than other wealthy countries. As a result, mortality, due to lack of early care in the United States, is very high and the ones who are over seventy-five years are at risk.

Someone may  claim that there is an American dream, so one can be born poor, but s/he can become rich in the course and thus escape from the aforementioned problems.

Fotini Mastroianni

However, the figures are disappointing. In the 1970s, only one in seven could rise to the high income class whereas today is  one in ten. Those who belonged to the high income category of 1% of the American population were in the same category in the 1970s as evidenced by the heredity of wealth. Due to the accumulation of wealth, social mobility will be  more difficult for the lower classes.

The complete failure of the neoliberal model is  proven in the first country of its full implementation i.e. the USA. This model of complete misery for the middle  and working class is applied throughout Europe and Greece is no exception.

Populism – Left and Right

Fotini Mastroianni

Populism is a timeless international phenomenon that always arises when the elite (ruling class) oppresses the lower classes and conditions of extreme inequality and poverty prevail.

Some suggest that we must see populism in terms of right-left, that is, there is right and left populism (which, however, differs significantly from anarcho-populism).

Both populisms (left and right)  are against the elites, the existing political system and inequality. They both come from the class of employees, and their differences are mostly on social issues.

They support revolutionary changes but usually in a peaceful way. Their basic difference is that right-wing populism supports (in some cases in a dynamic and activist way) protectionism in the economy, is anti-immigrant, supports the army, but opposes radical feminists, progressives, homosexuals (even though  in the German Afd the lead candidate was the lesbian Alice Weidel).

Generally right-wing populism does not support people equality. Some  people believe that right populism, in some cases, is made up of social conservatives who believe that modern capitalism must have moral foundations and values ​​such as family while another part of right-wing populists is against capitalism but by preserving institutions such as the family and family values.

Both support  that it is the state that must promote these values. Regarding religion, part of the social conservatives maintains a neutral attitude while in the right populism there is a closer relationship.

However, while religious Christians who belong to social conservatives (footnote – all Christians do not belong to the conservatives), support the expansion of the welfare state which is a way that is consistent with the Christian principle of caring for the poor.

In Greece, the reference to Christian faith is of a different meaning since it is related to the salvation of Greece by the oppressors mainly foreigners and the belief that faith in God will protect Greece from suffering. It is obvious that this perception is due to the different political history of Greece where the intervention of the foreign powers has always been distinct in contrast to countries like the USA etc.

Right-wing populists (far more than social conservatives) are against capitalism, but there are few references in  Greece about the type of economic system they want to implement.

Left- wing populism also opposes the elite and, in some cases, it does not believe in nations and the existence of social classes. It supports globalization, internationalism, environmental movements and the welfare state. Its basic principle is equality and is usually less well-organized and aggressive than right-wing populism, with the exception of Antifa.

At this point, it should be noted that both right and left populism can become authoritarian, especially when organized. In this case, it becomes tyrannical (see defamatory statements expressed by governmental representatives with the designation “nationalists”, “fascists”, etc. for all those who participated or supported the Greekity of Macedonia and have been against the Prespa agreement even statements that devaluate in its entirety (!) Greek people and support its replacement with citizens of the world (!) suggesting this way some dangerous eugenic beliefs. These statements are a typical feature of leftist organized tyrannical populism. Extreme left-wing populism wants to impose equality and obedience to the state by extinguishing elements such as different culture, history, religion, etc. even with the use of violence, thus identifying the most extreme forms of fascism.

In times of terrible economic crisis like the one we are experiencing in Greece, the extreme forms of authoritarian populism (right and left) lead to extreme, authoritarian political “solutions”. In this case, the interests of the few will be served and the fear that tyranny will impose with the use of violent means of suppressing popular will prevail.

Fotini Mastroianni

We live in a time of absurdity. We all want prosperity, political, social and economic equality, and we pur our home land  first without that meaning that we want to hurt others and that we are extreme. Unfortunately, it seems that extreme beliefs are  the most prevalent and as such they will create correspondingly extreme political choices that include, among other things, war conflicts. It seems, finally, that we people, unfortunately, do not learn from our history.

Open Space Offices Exhaust Employees

Fotini Mastroianni

The majority of the offices we see, work or are offered for sale or as rentals are those of open spaces. In open-air offices,  many employees work with their offices very close to one another.

In the beginning, the reasons for the creation of these open spaces were the rise in productivity, the creation of a collaborative working environment and creativity. In reality, however, the reason was different and the real reason was only the close monitoring of employees and the complete abolition of their privacy.

It is no coincidence, in support of the above, that in many of these open spaces, the supervisor is , usually found in a glazed cabin in which s/he retains some privacy in relation to ordinary employees, and can at the same time oversee others with his/her distinct role of power. This is about creating a modern production plant that has been transferred to the  service sector. These spaces, however, create problems.

Especially for high-performance employees who need quietness to concentrate on their work, open spaces with the bustle created by other employees are an inappropriate environment for them. Things are even worse for introverts (50.7% of the population) who need their own space, the continued presence of others “above their heads” may be  a martyrdom. If a colleague likes listening to music, then martyrdom may be worse.

But besides sonic pollution there is also visual contamination, that is, the continuous movements of others distract attention, productivity vanishes.  People do not want to be in constant and close contact with others at the workplace and it has been noticed that good employee absenteeism increaAlternatively, office spaces with glass partitions can be created in the case where it is not possible to have separate offices. It is also possible for the employee to work from home and one day a week to be in the company’s offices so that he is not isolated from his colleagues. All of these are different proposals that are discussed at times and some businesses have done them, especially homework.ses and productivity is further reduced.

These data have been confirmed by a lot of  of research. More specifically, everyday 86′ work are lost due to the various inconveniences that occur in open space workplaces and 23′ per employee are needed to recover from these inconveniences. Productivity decreases by 15% and employee welfare is reduced by 32%. Let us not, of course, discuss the easy contamination of illnesses among employees. According to a 2011 research in Denmark, the likelihood of an employee getting ill in these places increases by 62%.

Open space offices may be appropriate for sales departments but not for other types of jobs. The solution proposed internationally is working from home, something that with the current technological advancement is absolutely feasible.

This way, the company saves money from renting premises and employees become  more productive. Alternatively, office spaces with glass partitions can be created in case where it is not possible to have separate offices. Employees may also work from home and one day a week to be in the company’s premises so that not become alienated from his colleagues. All  these are different proposals that are discussed at times and some enterprises have implemented them, especially working from home.

Fotini Mastroianni

However, in this case, the balance between personal and professional life needs to be reconsidered because it has been noticed that home turns into an office with all the negative effects it can have on the employee’s family life.

The Road to Freedom

Fotini Mastroianni

“What is the current price of an honest man and patriot today? They are ambiguous and saddened, and they sometimes make appeals, but they do nothing decisive and effective. They are expecting, well-intentioned, that someone else will correct the evil so that there is no longer any sorrow for them. At best, they sacrifice only a cheap vote, and a tiny support and hope for good success, for the right as they see it. “

Henry David Thoreau

Henry David Thoreau in his essay “On the Duty of Civil Disobedience” supported being disobedient to an unfair state. His ideas were influenced by Mahatma Gandhi and also by the minister Martin Luther King Jr., who championed disobedience and resistance in a non-violent way. Strikes, symbolic protests, the boycott of products, refusal to pay (see taxes, tolls, etc.) are peaceful methods of resistance and civil disobedience. Usually, the peaceful struggle is outside the existing political system and requires mass mobilization.

According to research, major peace campaigns were more successful compared to violent resistance campaigns.

Mahatma Gandhi

Gandhi succeeded in mass mobilizing his people because he created the vision of independence of the Indians from the British colonialists. This vision, which has also been transposed through Gandhi’s continuous teachings, has succeeded in achieving social solidarity with the Indian people and reducing the gap among social classes in India.

Massive mobilization was also achieved by the minister  Martin Luther King Jr. on August 28, 1963, with the March on  Washington, where  250,000 protesters participated.

Martin Luther King Jr.

In this March, he gave his famous “I Have a Dream” speech. Martin Luther King was arrested and wrote from prison the famous “Letter from Birmingham” in which he called for civil disobedience against unjust laws. The Kennedy government understood the explosive situation that had been created, and in 1964the Human Rights Law passed.

 

It is important to note that, according to analysts, the problem was not created by the ones that were opposed to the rights of black people but by the moderate supporters calling for restraint, thus triggering the rise of the violent resistance of the blacks i.e. Black Panthers.

This point is very much in line with what Thoreau wrote: “Those who, while condemning the character and measures of a government, give it their submission and support are undoubtedly its most conscientious supporters, and thus they are often the most serious obstacles to the reform “.

Resistance campaigns are successful if they are large-scale, gain support from security forces and civil servants and, if possible, have support from abroad but from prestigious groups that will not harm the credibility of the campaign.

Support by mass media is also important, as it was the case with the Martin Luther King Jr. ‘s March on Washington, which was widely covered by the media. In the event that the media do not help with the provision of independent news and right technology then the “weight” falls into the independent voices i.e. on the Internet, blogs, portals, alternative YouTube channels, social media, etc. Peace activists also emphasize the importance of distributing educational material (books, DVDs, brochures, etc.) that will inform the audience about the results of previous peaceful campaigns. Activists emphasize that this is particularly important for the mobilization, namely teaching and information (Gandhi’s example with continuous teachings confirms this fact).

We live in an era of economics where democracy is now going away for the benefit of the global financial sector. Autocratic regimes will try to stifle peaceful reactions through Internet monitoring, as well as other means such as oppression through prohibitive laws and even intimidating citizens.

Will the modern citizen allow it or is s/he so alienated that does not resist anymore? Why is there no longer a leadership that has a vision and can mobilize people? Is it maybe because leadership is equally alienated? Is it vain to hope for leadership when the social movements all around the world are massive and not led by someone?

Fotini Mastroianni

The questions arising from the lack of peaceful mobilization and civil disobedience are many and it would be interesting to further search them to find an answer.