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Kuznets and Kondratieff or Tunneling through the Curve

At the LCM in Berlin I was impressed by the speech of Ernst Ulrich von Weizsäcker. Within his presentation he described the current situation and challenges by two curve concepts.

Environmental impact and Economic Development

The Kuznets curve explains the connection between pollution and per capita income. It reminds me of the approach of Marx and others to explain the development of socialism. In this context each society has to pass all stages of economic development including capitalism to reach the highest stage: socialism. Fair enough, history has falsified this view. But in a similar way Kuznets explains that reducing the environmental impact needs a certain level of economic development. Only when reached this stage, represented by a certain level of per capita income, there is growing environmental health while society develops.

Source: Green Wiki

In his speech von Weizsäcker emphasized the necessity to tunnel through this Kuznets curve. This is nothing absurd. That can be explained by another curve concept – the Kondratieff cycles.

Innovation and Creative Destruction

The Russian scientist Nikolai Kondratieff explained economic activity by long waves or cycles. This concept was further pursued by Joseph A. Schumpeter who named the long waves “Kondratieff cycles”. The idea behind it is quite easy: a key innovation releases a process of creative destruction in which all traditional production modes, techniques and processes are questioned and finally replaced by new and innovative concepts. This leads to economic development and wealth until there is need for a new innovative idea. The Europe economy of modern times has passed six cycles so far.

1. cycle: textiles

  • key innovation: steam machine

2. cycle: transport

  • key innovation: rail / steal

3. cycle: mass consumption

  • key innovation: electrical engineering / chemistry

4. cycle: individual mobility

  • key innovation: automobile / petrochemical

5. cycle: information

  • key innovation: information technology

The sixth cycle is now questionable. For Leo A. Nefiodow it is health what will be the most important relevant aspect in economic development. Surely, health and health care are already a huge sector with an significant influence to the GDP. But coming back to Ernst Ulrich von Weizsäcker it is highly likely that environment and sustainability will be the protagonists of the next Kondratieff cycle. And if so, it is quite easy to tunnel through the Kuznets curve because of combining both economic and sustainable development.
If so, what might be the key innovations for releasing the process of creative destruction?

Looking forward to your comments.

By the way: here are the slides from Ernst Ulrich von Weizsäcker’s presentation at the LCM 2011:

 

Article image by _kaora

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