Home > NewsRelease > On the Shoulders of Giants
Text
On the Shoulders of Giants
From:
Dr. Robert Reuschlein, Empire and Climate Expert Dr. Robert Reuschlein, Empire and Climate Expert
Madison, WI
Saturday, October 31, 2015

 

Sir Isaac Newton said he wasn't so great; it's just that he stood "on the shoulders of giants." 

My giants are Ruth Leger Sivard, Nicolai Kondratiev, and Clement Juglar.

Ruth Leger Sivard (1915-2015, age 99)

Hired under Kennedy's Arms Control and Disarmament Agency in 1961, she was told to stop producing her comparative work by Nixon and Laird in 1970 and she left in 1971 and published privately her World Military and Social Expenditures from 1974 to 1996, seventeen volumes.  The government reverted to just publishing World Military Expenditures and Arms Transfers, but the White House was one of her best customers under Reagan in 1986.

Nicolai Kondratiev (1892-1938, age 46)

An agricultural economist who was a member of the Peoples Commissariat of Agriculture under Lenin.  He favored free market small business as did Lenin, but Stalin wanted complete control over the economy.  He started an institute of conjecture in 1920 which had 51 researchers by 1923 (wiki), his major cycle idea came in 1922 and 1925 books.  After Lenin's death in 1924 he was removed as director of his institute by Stalin in 1928 and eventually put to death in 1938.  His theory of 50 or 60 year long cycles in capitalist economies contradicted the Marxist idea of the imminent collapse of capitalism.  Instead, John Maynard Keynes became the dominant economist of the times eclipsing Kondratiev.

Clement Juglar (1819-1905, age 85)

The Encyclopedia Brittanica considers him the first to develop a theory of business cycles, in 1860. He developed the fixed investment cycle of about nine years, eight to ten years by the encyclopedia, seven to eleven years by the wiki.

Reuschlein's Use of Their Works

Sivard:

Sivard was the crucial first information as she published twenty year average military spending statistics for the seven largest capitalist economies plus Denmark and Sweden.  In two volumes she had a bar chart showing that the higher the military the lower the manufacturing productivity growth rate (1981) or capital investment rate (1983).  The first one was tested for correlation by an article by Nils Petter Gledisch, the editor of the Journal of Peace Research in Oslo, Norway where the Nobel Prize in Peace is awarded.  But his correlation was only -0.81 and I improved that two ways.  First, recognizing Canada as the outlier, the correlation without Canada is -0.98, but by combining Canada with the United States, and combining the six European countries, with Japan as the third data point, the correlation is -0.997.  Likewise, with the capital investment calculations, treating Italy, Canada, and Japan as outliers, the other four European countries plus the US (Denmark was left out by Sivard) had a total of military plus capital investment of 20.5% of GDP with a correlation of -0.993.  Japan had unusually high savings rates with a total of 25% and Canada and Italy were unusually low with a total of 17%.  This shows how Japan was able to invest in the four Tigers of South Korea, Taiwan, Hong Kong, and Singapore in this 1960-1980 time period and later China when they opened up.  Thus Japan's low military spending fueled much of the rise of the whole of East Asia.  As for Canada and Italy, they are both peripheral countries on the edge of the main countries of either Germany, France, and Britain or the United States on the respective continents.  In the original EU, Italy had only one neighbor, France, and in North America, Canada has only one neighbor, the United States.  So both counties are geographic outliers.  Britain was outside the EU until 1974 but had a Commonwealth to rely on.

Now before you can say correlation is not proof, I have developed the logic and numerous other tests that take this way past that simplistic putdown.

Kondratiev:

By 1950 another author had published a 700 year study (1240-1940) of British wheat prices. Judged against a fifty year moving average, this clearly shows 14 repetitions of the 54 year cycle.  A friend told me that the cycle was 24 year up and 30 years down, so I used that in my model.  I had already tried to model economic growth in the United States, adding back the lost growth of military spending, and clearly the long cycle appeared in that longitudinal graphing, with a huge bulge in the fifties.  Also, clearly, world war two does not work without factoring in the deficit. So the basic three factors were military spending, the long cycle of 54 years, and the federal deficit.  But nations vary in population growth and this is a major economic factor.  So I modeled on manufacturing productivity, which took me back to 1920.  Sivard must have realized that military reduces manufacturing particularly, when she used that statistic and not the normal economic growth statistic for each country's comparison with the military.  This allowed me to create an amazingly accurate model, even though each year the predicted manufacturing productivity growth rate varied greatly with the actual measured manufacturing productivity.  I went back to the economic growth rates to determine tops and bottoms of the economy by means of using a variety of multiyear averages.  Likewise, the economic growth rate had several periods of 8% growth and several periods of 2% growth, so I estimated a the growth rate was give or take 3%.  The true growth rate before the military reduction was 9% for the period 1960-1978, a below average period in the long cycle between the 1952 peak and the 1982 bottom, so I used 10% for the model, adjusting the 3% variance sinusoidally so the peak was 13% in 1952 and 7% in 1928 and 1982.

Juglar:

The model seemed to fit very well in the post war period, even though annual fits were erratic.  So I tried keeping a running total of both predicted and actual.  Lo and behold, every so often, the running total seemed to perfect out.  I identified several precise fits, every Juglar cycle of nine years give or take a year.  Sometimes, the model would perfect out every three years.  I had discovered the Juglar cycle of 8 to 10 years and the inventory cycle of three years. Around the world wars were gaps in the data, but averages worked well for the peace years and zero for the war years.  Then there was the 30s Great Depression and the 70s Oil crisis.  Using common sense, and fortunately, several threes in the thirties and seventies, I calculated the drop of each special shock period, with the 1930-1933 period and the 1942-1945 period had to be left out of the model.  The war had no civilian productivity, and the free fall into the depression was also an uncontrollable extraordinary period.  But there were six clear near perfect Juglar cycle fits in the first model and eight in the 1996 extension.  Moreover, the upside annual error total and downside annual error totals in each Juglar cycle not only offset in each Juglar cycle, they were linearly decreasing from the twenties to the eighties, then leveling off since 1982.  Thus the inventory cycle of recessions about every three years was slowly being wrung out of the economy.  The volatility of the twenties was reduced 80% by the eighties, and sure enough, recessions have been about every nine years since then:  1982, 1991, 2000, 2009.  Thom Hartman has the next one 2016 but it looks more like 2018 fits the current sequence.  Means Hillary could get elected but end up a one termer.

Here is the sixty year model of the Reuschlein theory of military spending and economics:

https://www.academia.edu/7632773/PROOF_of_Peace_Economics_11_pages_1986

Hint: to read this paper for free, you must click on the tiny word "read" in the middle of the bottom of the screen after you go to the above link on academia.edu.

Professor Robert Reuschlein, Dr. Peace

bobreuschlein@gmail.com,

www.realeconomy.com,

608-230-6640

News Media Interview Contact
Name: Dr. Robert W. Reuschlein
Title: Economics Professor
Group: Real Economy Institute
Dateline: Madison, WI United States
Jump To Dr. Robert Reuschlein, Empire and Climate Expert Jump To Dr. Robert Reuschlein, Empire and Climate Expert
Contact Click to Contact
Other experts on these topics