People and states oscillate between peace and war, freedom and slavery, order and disorder. They tire easily. Even happiness soon grows wearisome. No sooner do they begin to enjoy the benefits of wise and just government than they demand more wisdom and a different kind of justice. Factions spring up. Everyone is on the lookout for new privileges. The equilibrium that was so hard to strike crumbles. Wild hopes are embraced. The system collapses. Everything has to be built up anew on the ruins of the past.
The leading modern-day cyclical theorist is “undoubtedly” Peter Turchin, who co-wrote Secular Cycles with Sergey A. Nefedov:
Their innovation (building on an argument made by my GMU colleague Jack Goldstone in his 1991 book Revolution and Rebellion in the Early Modern World) is to take the Malthusian model of economic cycles and add to it a model of elite competition.
Tuchin and Nefedov show that periods of demographic expansion are often associated with the growth of elite incomes and inequality (as population growth causes rents to rise and wages to fall). More elites competing over the surplus, however, puts fiscal pressure on the surplus-extraction machine that we call the state. Elite overproduction thus brings about a political crisis. Secular Cycles applied this model to medieval and early modern England and France, Russia and ancient Rome. Turchin’s most recent book applies it to the United States.
Bas van Bavel’s The Invisible Hand? presents another cyclical account of things. Koyama cites Branko Milanovic’s review:
Van Bavel’s key idea is as follows. In societies where non-market constraints are dominant (say, in feudal societies), liberating factor markets is a truly revolutionary change. Ability of peasants to own some land or to lease it, of workers to work for wages rather than to be subjected to various types of corvées, or of the merchants to borrow at a more or less competitive market rather than to depend on usurious rates, is liberating at an individual level (gives person much greater freedom), secures property, and unleashes the forces of economic growth. The pace of activity quickens, growth accelerates (true, historically, from close to zero to some small number like 1% per year) and even inequality, economic and above all social, decreases . . .
But the process, Bavel argues, contains the seeds of its destruction. Gradually factor markets cover more and more of the population: Bavel is excellent in providing numerical estimates on, for example, the percentage of wage-earners in Lombardy in the 14th century or showing that in Low Countries wage labor was, because of guilds, less prevalent in urban than in rural areas. One factor market, though, that of capital and finance, gradually begins to dominate. Private and public debt become most attractive investments, big fortunes are made in finance, and those who originally asked for the level playing field and removal of feudal-like constraints, now use their wealth to conquer the political power and impose a serrata, thus making the rules destined to keep them forever on the top. What started as an exercise in political and economic freedom begins to look like an exercise in cementing the acquired power, politically and economically. The economic essor is gone, the economy begins to stagnate and, as happened to Iraq, Northern Italy and Low Countries, is overtaken by the competitors.
Theories of built-in cyclical mechanisms in human societies have some credibility. However, on the longer scale there are clear climatically induced cycles of a couple thousand year period. See, J. L. Brooke (2014), Climate Change and the Course of Global History, Cambridge Univ. Press, New York.
Ancient Egypt lasted more or less intact for about 3,000 years. Dynasty changes, yes, but a culture and nation intact and at the top of their game for a very long time.
In financial markets, when times are good, cycle theories are dismissed. When times are bad, cycle theories become popular.
If you never want to suffer from cycles, you should believe in them.