Sweden & Kondratieff

From his excursion into the 18th century roots of industrial Sweden, Erixon moves ahead a hundred years traces to the 1880s when the Wallenberg Bank was emerging from its second government bale-out and was buying up the best of Swedish invention-backed innovation companies at knock-down prices.

The inventors inherited in the process were either turned into businessmen or were replaced and put out to grass...Gustav de Laval being a case in point.

It is from this point onwards that there is a continuity in its economic development that remains even today. The golden age from 1945 to 1973 was part of a longer two hundred year sweep through into the 21st century.

Now although Erixon does not mention the idea, he presents an abundance of detailed evidence for the existence of a Kondratieff 50-60 year long wave of innovation-led infrastructure renewal in the Swedish economy.

The omission of any Kondratieff analysis is unfortunately not a trivial matter. And it is not as if 'official economics' has not flirted with the idea. Joseph Schumpeter in particular came close to discovering the forces at work behind the Kondratieff cycle in the interplay between capitalism's needs for new projects and the clusters of innovation that accompany infrastructure renewal after appearing first in a much more random fashion as isolated inventions.

Were the idea of an economic long wave accepted by economists, rather than being regarded as the ultimate heresy, the Swedish Model might appear in a rather different light...as a useful tool to use in the upswing of the next longwave cycle rather than a flawed model to be stuffed at the back of the economic history drawer.

This could be a matter of some considerable urgency.

For the next Kondratieff long wave cycle is currently building on the infrastructure needs of the information superhighway and the next generation of embedded microintelligence. Discarding the Swedish Model now just at the moment it is needed is the very last thing Sweden should do.

So it is good to know that there are economic historians like Lennart Erixon poking around in the ashes and asking the right questions. Because the worry is that the bankers, unions and governments who rule Sweden might in their ignorance...and with flawed advice from the latest economic fashion...seek to fight the last economic war instead of surfing the long wave into the 21st century. The European Commission has already fixed its yellow stars to this particular mast...and is busy sailing backwards into the wrong future, oblivious of its error.