Nikolai Kondratiev

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pages: 461 words: 128,421

The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street by Justin Fox

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activist fund / activist shareholder / activist investor, Albert Einstein, Andrei Shleifer, asset allocation, asset-backed security, bank run, beat the dealer, Benoit Mandelbrot, Black-Scholes formula, Bretton Woods, Brownian motion, capital asset pricing model, card file, Cass Sunstein, collateralized debt obligation, complexity theory, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, discovery of the americas, diversification, diversified portfolio, Edward Glaeser, Edward Thorp, endowment effect, Eugene Fama: efficient market hypothesis, experimental economics, financial innovation, Financial Instability Hypothesis, fixed income, floating exchange rates, George Akerlof, Henri Poincaré, Hyman Minsky, implied volatility, impulse control, index arbitrage, index card, index fund, information asymmetry, invisible hand, Isaac Newton, John Meriwether, John Nash: game theory, John von Neumann, joint-stock company, Joseph Schumpeter, Kenneth Arrow, libertarian paternalism, linear programming, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, market bubble, market design, Myron Scholes, New Journalism, Nikolai Kondratiev, Paul Lévy, Paul Samuelson, pension reform, performance metric, Ponzi scheme, prediction markets, pushing on a string, quantitative trading / quantitative finance, Ralph Nader, RAND corporation, random walk, Richard Thaler, risk/return, road to serfdom, Robert Bork, Robert Shiller, Robert Shiller, rolodex, Ronald Reagan, shareholder value, Sharpe ratio, short selling, side project, Silicon Valley, South Sea Bubble, statistical model, The Chicago School, The Myth of the Rational Market, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, Thorstein Veblen, Tobin tax, transaction costs, tulip mania, value at risk, Vanguard fund, Vilfredo Pareto, volatility smile, Yogi Berra

The phrase “random walk” appears to have been coined in 1905, in an exchange in the letters pages of the English journal Nature concerning the mathematical description of the meanderings of a hypothetical drunkard.34 Most early studies of economic data had been a search not for drunken meanderings but for recognizable patterns and, not surprisingly, many were found. The purported link between the British business cycle and sunspots was one. Another famous example came in the mid-1920s when the young founder of Moscow’s Business Cycle Institute, Nikolai Kondratiev, proposed that economic activity moved in half-century-long “waves.”35 As the study of statistics progressed and the mathematics of random processes such as Brownian motion became more widely understood, those on the frontier of this work began to question these apparent cycles. In his November 1925 presidential address to Great Britain’s Royal Statistical Society, Cambridge professor George Udny Yule demonstrated that random Brownian motion could, with a little tweaking, produce dramatic patterns that didn’t look random at all.36 A few years later, a mathematician working for Kondratiev in Moscow penned what came to be seen as the definitive debunking of the pattern finders.

Holbrook Working, “Cycles in Wheat Prices,” Wheat Studies of the Food Research Institute (Nov. 1931): 2. 34. Karl Pearson and Lord Rayleigh, “The Problem of the Random Walk,” Nature (July 27, Aug. 3, Aug. 10, 1905). 35. The name has often been rendered in English as the Conjuncture Institute, but this seems an overly literal translation. Kondratiev is also sometimes spelled Kondratieff. His 1926 monograph Long Cycles and Economic Conjuncture can be found in The Works of Nikolai Kondratiev, vol. 1 (London: Pickering & Chatto, 1998). 36. G. Udny Yule, “Why Do We Sometimes Get Nonsense-Correlations Between Time-Series?—A Study in Sampling and the Nature of Time-Series,” Journal of the Royal Statistical Society (Jan. 1926): 1–64. 37. Eugen Slutzky [sic], “The Summation of Random Causes as the Source of Cyclic Processes,” Econometrica (April 1937): 105. 38. Cowles Commission for Research in Economics, Abstracts of Papers Presented at the Research Conference on Economics and Statistics, Colorado Springs, 1936, 99. 39.


The Blockchain Alternative: Rethinking Macroeconomic Policy and Economic Theory by Kariappa Bheemaiah

accounting loophole / creative accounting, Ada Lovelace, Airbnb, algorithmic trading, asset allocation, autonomous vehicles, balance sheet recession, bank run, banks create money, Basel III, basic income, Ben Bernanke: helicopter money, bitcoin, blockchain, Bretton Woods, business process, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, cashless society, cellular automata, central bank independence, Claude Shannon: information theory, cloud computing, cognitive dissonance, collateralized debt obligation, commoditize, complexity theory, constrained optimization, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crowdsourcing, cryptocurrency, David Graeber, deskilling, Diane Coyle, discrete time, distributed ledger, diversification, double entry bookkeeping, ethereum blockchain, fiat currency, financial innovation, financial intermediation, Flash crash, floating exchange rates, Fractional reserve banking, full employment, George Akerlof, illegal immigration, income inequality, income per capita, inflation targeting, information asymmetry, interest rate derivative, inventory management, invisible hand, John Maynard Keynes: technological unemployment, John von Neumann, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kevin Kelly, knowledge economy, labour market flexibility, large denomination, liquidity trap, London Whale, low skilled workers, M-Pesa, Marc Andreessen, market bubble, market fundamentalism, Mexican peso crisis / tequila crisis, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, natural language processing, Network effects, new economy, Nikolai Kondratiev, offshore financial centre, packet switching, Pareto efficiency, pattern recognition, peer-to-peer lending, Ponzi scheme, precariat, pre–internet, price mechanism, price stability, private sector deleveraging, profit maximization, QR code, quantitative easing, quantitative trading / quantitative finance, Ray Kurzweil, Real Time Gross Settlement, rent control, rent-seeking, Satoshi Nakamoto, Satyajit Das, savings glut, seigniorage, Silicon Valley, Skype, smart contracts, software as a service, software is eating the world, speech recognition, statistical model, Stephen Hawking, supply-chain management, technology bubble, The Chicago School, The Future of Employment, The Great Moderation, the market place, The Nature of the Firm, the payments system, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, too big to fail, trade liberalization, transaction costs, Turing machine, Turing test, universal basic income, Von Neumann architecture, Washington Consensus

., 2013). Figure 4-2. Technology curves and their economic effect on the cost of production. Left image: Wright’s Law (1936); Right image: Moore’s Law (1965) Sources: Left image - Wikipedia; Right image - http://dx.doi.org/10.1371/ journal.pone.0052669 In economics Kondratiev waves (named after The Soviet economist Nikolai Kondratiev), are cyclic phenomenon that link the cycle of a technology’s invention, expansion and ultimate replacement to their economic effects. Although Nikolai Kondratiev was the first to study the economic effects of technology on prices, wages, interest rates, industrial production and consumption in 1925, Joseph Schumpeter was responsible for their entry into academia. 6 159 Chapter 4 ■ Complexity Economics: A New Way to Witness Capitalism This link between the combinatorial evolution of technology and the effect it has on a networked economy is key to understanding not just the economic impact of technological progress, but also in understanding a key tenet of modern day capitalism technology and the economy follow the same patterns of evolution as seen in ecological systems, and in doing so, increase the complexity of the system.


pages: 232 words: 67,934

The Immortalization Commission: Science and the Strange Quest to Cheat Death by John Gray

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Alfred Russel Wallace, anthropic principle, anti-communist, dematerialisation, George Santayana, laissez-faire capitalism, Law of Accelerating Returns, life extension, Nikolai Kondratiev, random walk, Ray Kurzweil, the scientific method

In 1919 Dzerzhinsky made him head of the section of the Cheka that dealt with intelligence and counterintelligence and after Dzerzhinsky’s death in 1926 Menzhinsky became head of the OGPU. A poet and novelist, Menzhinsky’s writings reveal a personality shot through with thwarted moral passion. It was Menzhinsky, by then Stalin’s most trusted aide, who in 1930 staged the first of the trials, when a group of engineers and economists (including the founder of the long-wave theory of economic cycles, Nikolai Kondratiev) were arrested and charged with belonging to a nonexistent ‘Industrial Party’. In poor health, Menzhinsky conducted interrogations while lying on a divan, always well mannered and charming, particularly with women, treating them with old-world courtesy as he despatched them for torture, rape and execution. The Chekist supermen died as others do, if more violently and absurdly. Like Blyumkin, Menzhinsky was consumed by the Soviet death machine.


pages: 299 words: 19,560

Utopias: A Brief History From Ancient Writings to Virtual Communities by Howard P. Segal

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1960s counterculture, British Empire, Buckminster Fuller, complexity theory, David Brooks, death of newspapers, dematerialisation, deskilling, energy security, European colonialism, Francis Fukuyama: the end of history, full employment, future of journalism, garden city movement, germ theory of disease, Golden Gate Park, invention of the printing press, Isaac Newton, Jeff Bezos, John Markoff, John von Neumann, knowledge economy, liberation theology, Louis Pasteur, Mark Zuckerberg, mass immigration, means of production, Nicholas Carr, Nikolai Kondratiev, out of africa, Ralph Waldo Emerson, Ray Kurzweil, Ronald Reagan, Silicon Valley, Skype, stem cell, Stephen Hawking, Steve Jobs, Steve Wozniak, Stewart Brand, technoutopianism, Thomas Malthus, Thorstein Veblen, transcontinental railway, traveling salesman, union organizing, urban planning, War on Poverty, Whole Earth Catalog

Nor, for that matter, can one take too seriously the argument of economist Brian Berry that the pattern of America’s utopian communal formation correlates with long-wave economic rhythms. Specifically, the Kondratiev theory held that periodic deflationary troughs produced economic crises and that those crises led to utopian experiments as havens for those hurt financially. (Named after the Russian economist Nikolai Kondratiev (1892–1938), this theory contends that, in the modern capitalist 30 The Variety of Utopias world economy, high sectors of growth in certain economic sectors alternate with low sectors of growth every fifty or sixty years.) Unlike the communitarians, utopian writers usually agreed on the nature of the fundamental problems of the day even if they often disagreed about solutions. These problems were called “industrialization,” “urbanization,” “immigration,” or “labor unrest.”


pages: 261 words: 86,905

How to Speak Money: What the Money People Say--And What It Really Means by John Lanchester

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asset allocation, Basel III, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Swan, blood diamonds, Bretton Woods, BRICs, Capital in the Twenty-First Century by Thomas Piketty, Celtic Tiger, central bank independence, collapse of Lehman Brothers, collective bargaining, commoditize, creative destruction, credit crunch, Credit Default Swap, crony capitalism, Dava Sobel, David Graeber, disintermediation, double entry bookkeeping, en.wikipedia.org, estate planning, financial innovation, Flash crash, forward guidance, Gini coefficient, global reserve currency, high net worth, High speed trading, hindsight bias, income inequality, inflation targeting, interest rate swap, Isaac Newton, Jaron Lanier, joint-stock company, joint-stock limited liability company, Kodak vs Instagram, liquidity trap, London Interbank Offered Rate, London Whale, loss aversion, margin call, McJob, means of production, microcredit, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, negative equity, neoliberal agenda, New Urbanism, Nick Leeson, Nikolai Kondratiev, Nixon shock, Northern Rock, offshore financial centre, oil shock, open economy, paradox of thrift, Plutocrats, plutocrats, Ponzi scheme, purchasing power parity, pushing on a string, quantitative easing, random walk, rent-seeking, reserve currency, Richard Feynman, Richard Feynman, Right to Buy, road to serfdom, Ronald Reagan, Satoshi Nakamoto, security theater, shareholder value, Silicon Valley, six sigma, South Sea Bubble, sovereign wealth fund, Steve Jobs, survivorship bias, The Chicago School, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, trickle-down economics, Washington Consensus, wealth creators, working poor, yield curve

(This is just the queen’s personal fortune, to be distinguished from the stuff that belongs to the monarchy as an institution: the Crown’s estate is worth another $10 billion, Buckingham Palace $5 billion more, and the art that belongs to the nation but that the royal family treats as their property is worth maybe another $1 billion.) That wealth was not stolen in the same way that Mobutu stole his, but it was expropriated from the collective wealth through the nonpayment of tax—which is closer to a kleptocratic arrangement than to a democratic one. If we accept this line of arguing, then the number 8 spot on the list belongs to “UK, Windsor, $500 million.” Just saying.50 Kondratiev cycle Named after Nikolai Kondratiev (1892–1938), this cycle is a long slow wavelike pattern in economics, in which a period of expansion is followed by a period of stagnation and then of collapse and recession, over a period of forty to sixty years. The industrial revolution and the arrival and impact of the railways are examples of phenomena that to some look like Kondratiev cycles. There’s no real proof of the existence of these waves, and most economists don’t believe in them, but they have their fans.


pages: 379 words: 114,807

The Land Grabbers: The New Fight Over Who Owns the Earth by Fred Pearce

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Asian financial crisis, banking crisis, big-box store, blood diamonds, British Empire, Buy land – they’re not making it any more, Cape to Cairo, carbon footprint, clean water, corporate raider, credit crunch, Deng Xiaoping, Elliott wave, en.wikipedia.org, energy security, farmers can use mobile phones to check market prices, index fund, Jeff Bezos, land reform, land tenure, Mahatma Gandhi, market fundamentalism, megacity, Mohammed Bouazizi, Nikolai Kondratiev, offshore financial centre, out of africa, quantitative easing, race to the bottom, Ronald Reagan, smart cities, structural adjustment programs, too big to fail, urban planning, urban sprawl, WikiLeaks

Moreover, its apparent randomness is only an illusion: once the sequence of events that we call ‘history’ is shown to be governed by certain behavioural algorithms, we can then discern, with clarity, the degree to which our lives are bound up in numerous interrelationships.” Phew. Payne’s presentations, meanwhile, often include a scary graph showing something called the Kondratiev Cycle, after Nikolai Kondratiev, the Russian economist who invented it. I’m not clear how the Elliott Wave and the Kondratiev Cycle relate, if at all. But her graph shows U.S. commodity prices since 1800, rising and falling in a long cycle with spikes roughly every fifty years. Some have claimed that the supposed cycle is created by technological innovations. Others suggest credit cycles or demographics. Payne proposes a link to conflicts.


pages: 584 words: 187,436

More Money Than God: Hedge Funds and the Making of a New Elite by Sebastian Mallaby

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Andrei Shleifer, Asian financial crisis, asset-backed security, automated trading system, bank run, barriers to entry, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Bonfire of the Vanities, Bretton Woods, capital controls, Carmen Reinhart, collapse of Lehman Brothers, collateralized debt obligation, computerized trading, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, currency manipulation / currency intervention, currency peg, Elliott wave, Eugene Fama: efficient market hypothesis, failed state, Fall of the Berlin Wall, financial deregulation, financial innovation, financial intermediation, fixed income, full employment, German hyperinflation, High speed trading, index fund, John Meriwether, Kenneth Rogoff, Long Term Capital Management, margin call, market bubble, market clearing, market fundamentalism, merger arbitrage, money market fund, moral hazard, Myron Scholes, natural language processing, Network effects, new economy, Nikolai Kondratiev, pattern recognition, Paul Samuelson, pre–internet, quantitative hedge fund, quantitative trading / quantitative finance, random walk, Renaissance Technologies, Richard Thaler, risk-adjusted returns, risk/return, rolodex, Sharpe ratio, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, statistical arbitrage, statistical model, survivorship bias, technology bubble, The Great Moderation, The Myth of the Rational Market, the new new thing, too big to fail, transaction costs

He had found his way to Arthur Lipper and Company, a brokerage firm known for servicing a notorious con man named Bernie Cornfeld, and he was an avid student of Kondratiev wave theory. The theory held that capitalist economies move in long cycles, with the upswings occurring during periods of technological innovation and abundant investment and the downswings occurring as new investments dry up and old ones lose value. Nikolai Kondratiev, the theory’s Russian inventor, founded the Institute of Conjuncture in Moscow in 1920; he identified upswings between 1789 and 1814, 1849 and 1873, and 1896 and 1920. Cilluffo was convinced that the pattern of twenty-four-year advances would repeat itself again, meaning that the economy would hit the rocks in 1973, twenty-four years after the start of the postwar bull market. It was not exactly clear why cycles of innovation should echo themselves so precisely across different centuries and circumstances: Kondratiev’s conjuncture was based mainly on conjecture.