Psychoeconomics: globalization, markets, crisis

The first-generation elite is substantive, objective. The second generation of the elite is filled with social motivators. Without the difficulties that temper it, without the struggle for domination, without reinvention, the third-generation elite becomes emotionalized, hysteroid, and loses the ability to manage society effectively.

This logic of elite formation is valid when the development of society proceeds more or less without conflict. At the same time, internal and external conflicts and problems can introduce large nuances into this development, up to the point of creating the necessary conditions for rapid renovation of the elite, moving intelligent competent people into the elite to renew it, or rapid changes toward creating the necessary abilities in the existing elite.

The coupling of the type of elite and the type of economically active population in a country determines the basic socio-economic processes. Rates of economic development and the nature of relations between various social groups, political processes etc. depend on this. When the combination is detrimental, that is, when the third generation elite and the condition of the population when it mimics emotionalized, psychopathic people, a psychoeconomic crisis occurs.

History shows that this three-generational phenomenon has time limits. It may take up to a hundred years or more, and it may be shorter than 50 years. This does not depend just on the average lifespan (all else being equal, when lifespan increases, the time of three generations also increases on average). It also depends on social factors, on solar activity, on management decisions, on the personality shaping decisions on socioeconomic processes and on the decisions of the government and legislative agencies of the leading countries, and on a system of exogenous factors. The U.S. is a country where the degree of influence of external factors on development is much lower than in most other countries. And here this time interval is more indicative.

The strongest socioeconomic upheaval in the history of the U.S. (which coincided with a solar activity peak) was the Civil War of 1861-1865. The first-generation elite was formed as a result.

Prior to this, the first-generation elite was created during George Washington’s administration (1789-1797). From the beginning of George Washington’s presidency to the beginning of the US Civil War, 72 years passed.

The first-generation elite was formed anew as a result of the Civil War.

This elite grew out of the struggle, out of a violent civil war. At the top of the social hierarchy moved those who were more capable, but not more astute or successful in the system of interpersonal relationships. From the moment the U.S. Civil War began to the moment of the conclusion of the country’s second most powerful socioeconomic conflict (the Great Depression of 1929-1933), 72 years passed. If we add that time to the year of the end of the Civil War in the U.S., we get 1937. This was just as critical a year for the U.S in the opinion of modern economists. Now if we add 72 years to 1937, we get 2009. Although it is generally accepted that a world crisis began in 2008, nevertheless the coincidence of the numbers has a sacred character.

During wars, the succession of the elite psychotypes, the economically active population, and the development of the country obey slightly different laws.

The new first-generation elite in the U.S. likewise grew out of the flames of war. Let us add 72 years to 1945 (or perhaps to 1944, the Bretton Woods Conference). 2017 (plus or minus 3 years) is a time when by analogy with the past, sufficiently compelling reasons may arise to replace the existing elite of the US with a new cohort of people. But much depends on the development of the crisis that has begun and on the managerial decisions being made.

One can argue with these calculations. One can include the depression and crisis of 1873-1896. For this reason one can object that different countries have their endogenous cycles of psychoeconomic crises and that this depression is an example of the influence of Germany’s development (which was in another cycle) on the US and other countries. This is an academic argument. For our purposes, it is important that countries that depend less than others in their development on the influence of neighboring countries have a more stable cycle in their development – three generations of elite and two to three generations of an economically active population. This affected all former world economic centers (Genoa, Antwerp, Amsterdam etc.). This affected the development of countries like the U.S. and U.S.S.R., that is, countries that depended on external factors less than others.

It is possible to insist that one must count from the conclusion of an event that serves as a sign of transition of government from one type of elite to another. We can and must maintain that wars deform the process. All this is true. In support of what has been claimed, it is interesting to note that since 1917, when the Bolsheviks came into power in Russia, until 1991, when the now-ruling political powers, the elite, came into power, 74 years passed. One may also object by insisting on 1989, when the CPSS in power fell. Then we likewise obtain 72 years. We may talk about what the events are that our consciousness connects to the arrival of the new elite, the loss of power of one elite and its interception by another. But real changes occur more under the influence of cumulative causes, that is, a large aggregation of microreasons. In the historical process, much is accidental, which carries its own corrections to the effects of cumulative causes. However, the peaks of solar activity arise quite consistently at a 12-year interval (plus or minus 1-3 years).

On average the power of the third-generation elite passes to the first-generation elite under the influence of endogenous factors in 72 years. Wars, revolutions, and exogenous factors may deform these processes. Then the new cycle “becomes attached” to the regular cycle of solar activity, but the 72-year period amazingly stably proves itself in the cyclical development of history.

On the basis of this, two peaks of solar activity fall on the first-generation elite, two on the second-generation elite, and two on the third-generation elite. Seventy-two years are gone. Regarding the replacement of social motivators by domain experts (in our concept, not just domain experts, but special types, resonators), this coincides with a 24-year cycle. But the domination in business by people with traces of hysteroidism may simply not occur. They commonly are swept up by a violent competitive struggle, especially if a large, developing country is nearby. Enterprises under the management of psychopathic, hysteroidal people due to these unfavorable exogenous factors simply go bankrupt. This explains why Kondratiev cycles are somewhat different from a 72-year cycle. But by any interpretation, this is not less than 48 years.

The moment of increased solar activity does not usually mean a changeover of psychotypes’ authority. It is an idiosyncratic indicator of the transition of influence of cumulative forces from supporting one psychotype to blocking its development. But by themselves these changes occur gradually, slowly, cumulatively. Suddenly they all begin to recognize that something in the system of socioeconomic relationships was not working out as required. The recognized contradictions begin to grow, authority built on certain psychological bases begins to crumble, and another authority arises.

With regard to resonators, they exist in any period of socioeconomic development. But here there arises a succession of them to become leaders in the new spiral of socioeconomic development. They increasingly begin to be aware of themselves and to feel the strength to dash into their activity (if they can catch the influence of cumulative causes). And after their peak of solar activity, this process speeds up. The psychophysiological causes are clear. In a period of solar activity, the mechanism of closing and opening conditioned reflexes, of changing the stereotypes of our thinking, works better. And by themselves the resonators, and importantly, those surrounding them, begin to understand capabilities of different population groups and their own capabilities, and to understand whom it is best to rely on. This benefits everyone.

But along comes a new peak of solar activity. Again the stereotypes of thinking begin to actively change. And gradually, cumulatively, people come together who understand that the efforts of the resonators may be improved by activation of external contacts, and not by searching for a new example, but by reproducing examples that are known to work well. This process accelerates at the next peak of solar activity. This is the first peak of solar activity for postresonators. At the second peak of solar activity, the feeling arises that everything is not going as wished.

Just as postresonators come to power, they are analogously replaced by post-postresonators. Or the economy of a given country is seized by the economically active subjects of other countries, and is ruined through competing with them. Sometimes this competition is blocked, such as by passing laws (e.g. 1933 in the U.S.) that introduce duties on imported goods. Sometimes it is simply blocked physically (e.g. the “Boston Tea Party” etc.) This tends to happen in countries that are leaders in military-political relationships.

Sometimes the elite in one or another government seems to have been appointed by the administration of another, more powerful government. The cycle will likewise be other than 72 years.

But on the whole, if we are talking about the effect of endogenous factors, altogether 72 years pass, and again a first-generation elite comes forth into the historical arena. But the moment of transition of power from the third-generation elite to the first-generation elite is usually hysterical, and often as not colored by bloodshed, especially if this occurs during special activity of the post-postresonators. The hysterical nature of the manifestation of the post-postresonators is polymorphous. One of these manifestations is the active inclusion of defensive reactions. Rational arguments are rejected with passion, vehemence, and they are hidden behind the denunciation of others…

But have there been more psychoeconomic crises like this? There is reason to suppose that the depression was one such, while in the opinion of some authors, the years 1873-1896 were also a crisis. U.S. economists have a somewhat different view of the boundaries of that depression, namely 1873-1879. But this is a more endogenous factor for Germany. For the U.S. it already possessed signs of being exogenous. Here, similar psychoeconomical dependencies appeared as with the crisis of 1929-1933. Leading to the market panic in 1873, bubbles in the real estate and property markets were inflated and there was a precipitous drop in share prices, etc. But the main evidence that the psychotypes of the economically active population had eventually changed in the direction of the appearance of an ever larger number of resonators is the change in the rates of development of the country. Germany leads in industrial growth. The average annual growth of industrial production in 1891-1913 in England was 2.1%, in the U.S., 4.12%, while in Germany, it was 4.2%. That is, cycles of economic development rooted in endogenous factors may be different in different countries and may not coincide.

It is amazing that the cycles described coincide with the period of cycles of development of humanity presented in the Book of Veles (Vedic religion).

In the Vedic calendar there are sacred numbers, including 144. In the Vedic periodization, a cycle occurs called the Circle of Life. This lasts 144 years. If we start from this premise, then 72 years is half the Circle of Life. It is not impossible that systemic changes in people’s psychology are at the bottom and in a 144-year cycle, which is likewise connected with cycles of solar activity.

We notice that according to the Maya calendar (December 21) and the Vedic calendar, a new epoch begins in 2012 – the Age of Aquarius, which replaces the Piscean Age. With the change of epochs, new patterns in the interrelationships of psychotypes will appear. If we subtract 144 years from 2012, we get 1868. We can tentatively take this for the beginning cycle of social changes in the U.S. Typing in the combination “1868” and “USA” into the Internet, we get the answer.

The presidential elections in the U.S. in 1868 were the first after the Civil War, in which General Grant won in a landslide, with extension of the right to vote to former slaves. In that year an amendment to the Constitution of the United States was passed, which guarantees United States citizenship to all people born on its territory. There is something to reflect on, knowing the place of birth of U.S. President Obama and the polemics on this topic.

But we need these calculations more for the psychological, intuitive, sacred prompting of a very important year in the turning point of the crisis of 1929-1933: 1940 arrives.

To confirm the reasonableness of a similar conclusion, let us examine the chart of change in these years of unemployment in the U.S. –

http://upload.wikimedia.org/wikipedia/commons/5/58/US_Unemployment_1910-1960.gif

The total number of unemployed in 1933 reached 17 million people, which was a quarter of the country’s entire workforce. So how can this year be considered the year the crisis ended?

But in 1939, qualitative reforms began in the U.S. economy and the pre-crisis level of industrial production was reached. However, American economists themselves are better able to speak about this. “Government policy adopted after the Great Depression gave birth to a new economic order… During the war, government expenses reached an unprecedented level. The country utilized all of its production capacity and hired practically all working-age Americans. And although most of its energy was directed at satisfying military needs, the total level of production met the requirements of the society. By the end of the war most Americans who had lived through it found themselves in a more lucrative condition than before the war, and the Great Depression, undoubtedly, was over.” (see: [1], pp. 28-29).

A profound meaning is to be found in these words. What is full employment of the population, a full workload of industry? This is a time when resonators and domain experts are at the center of attention and everyone depends on them. Previously much, if not all, depended on “knocking out” orders, and on the system of selling the manufactured product (social motivators sell), on the preferences on the part of the government (the social motivators likewise tackle those), etc. During the war, in a period of full occupation and a guarantee of almost automatic sale of what was produced, the professional skills of those who can produce, namely the professionals and domain experts, come to the foreground.

A similar periodization of the Great Depression coincides with the opinion of many leading contemporary American economists: 1929-1939. This is important, since in acknowledging the analogy between the Great Depression and contemporary processes in the economy, it is psychologically easier and more scientifically precise to approach designating the date of end of the recession (?) that began in 2008.

Thus, the crisis, which it is common to designate as the crisis of 1929-1933, in fact stretched to the beginning of World War II. For the U.S. this was a crisis in the system of socioeconomic relationships, which usually precedes the accession to power of the resonators.

It is similar to the crisis in Rome during the reign of Nero, and to the crisis in the U.S.S.R. at the beginning of the 1990s, and to hundreds of similar crises which have passed, are passing, and will pass into history with the appearance of the third-generation elite in combination with strengthening the hysteroidal personality traits in workers and the economically active population, and when it is not possible for this elite to manage the system of socioeconomic contradictions by understanding the essence of what is taking place and adopting preemptive decisions. The defensive reactions of the elite or those who imitate them become an impediment on the path of responsible reforms. This is further exacerbated by the fact that upon departing from the historical stage, the third-generation elite is not in a condition to change its psychotype in the immediate situation and capture the leadership from the resonators or simply from sensibly thinking people.

This is one of the reasons that the successful elite should know how to change its psychotype to its opposite, in a pendular way. This is necessary for following oscillatory changes of the population’s psychotype and successfully managing them also through psychological mechanisms and through personal example, and not simply through reasoning or military strength. Since, when the psychotype of the elite does not “click” with the psychotype of the basic mass of the populace, the elite is simply dethroned. Naturally this process is preceded by that of the elite losing their usefulness for the people and their control over surplus production and financial flows.

In crises of this type the role of the hysteroid personality increases sharply. This manifests itself in multiple facets.

First, in changing the motivational base of making decisions from the main subjects of economic activity (excluding resonators). The motives of economic behavior become more short-term. The role and significance of the emotional component grows. The irrational component in motivation grows.

Second, the growth of defensive reactions when making decisions. People to a smaller degree than usual begin to go along with the arguments not of dispassionate contemplation, but emotional impulses, the impulses of the unconscious.

Third, as a rise in contradictions between the conscious and unconscious, which makes people’s behavior illogical and complicates managing them by means that usually provide a good effect in a relaxed atmosphere. In this way it is a stressful situation – it is not clear what specific people’s reactions will be. Hence, beyond the framework of a given crisis, the assessment of the measures taken from today’s point of view may radically depart from that offered by participants of the given process.

Fourth, managing people typically requires emotional intervention, psychotherapeutic methods on the government scale. In this regard, the management decisions and behavior of Franklin Roosevelt during the crisis do not seem illogical at all. He would have needed to manage hysterical people with appropriate methods.

Roosevelt found himself in a situation in which exiting the crisis would have been without the support of the soundly thinking elite. This is a fact that Franklin Roosevelt himself acknowledges, speaking directly to the nation and blaming the Washington advisers for their incompetence. But this his adversaries would also admit in describing the atmosphere that had formed in government institutions and Roosevelt’s retinue. Could anything really have been done with the hysterical elite? And Roosevelt did about as much as he could. He prevented the bloodshed that had previously accompanied the shift of the third-generation elite. But he could not stop the elite from making sometimes unthinking decisions. Thus, the destruction of food products at a time when people were hungry was clearly an illogical step, aimed at average Americans, while protecting the interests of merchant princes and the banks that gave them credit. And Roosevelt talks about this frankly.

The elite did everything the way the third-generation elite had done for centuries before this. It did not change its psychotype, it did not increase production efficiency, but rather increased the degree to which it exploited its subjects. And the elite made a decision to eliminate food products. This decision came to fruition not during Roosevelt’s rise to power, but under Herbert Hoover. Roosevelt could not do anything about this. But he did the main thing – he did not allow bloodshed and created the conditions for a new elite to transition to power gradually. Ultimately, here the war “helped”. Authority at the beginning of the crisis of 1929-1933 was with the elite, the Federal Reserve, the bankers and the wholesale merchants. This power remained with them after the crisis, but more realistic people came into power. And some knew how to become more moderate after what had happened. A certain part of the elite was able to change its psychotype. In the period after World War II, the U.S. was already being managed by the first-generation elite.

Thus, the events of 1929-1939 can function as a source of our knowledge about the behavior of people during a crisis. Roosevelt’s decisions at that moment had not only an economic nature, but also a psychological and even psychiatric character. The crisis itself, the Depression, if we rely upon objective indicators, continued in the U.S. from 1929 through 1939.

In the history of humanity, psychoeconomic crises have arisen and been subdued spontaneously, due to exogenous factors, and this has always been related to stress factors.

Currently there are necessary scientific prerequisites for a more conscious role of regulators in surmounting psychoeconomic crises. The psychotypes of the elite, of the economically and politically active population change cyclically. The psychotypes in the elite and the economically and politically active population that have changed introduce not only other character traits into the system of socioeconomic relationships, they also introduce another system of motivation, value, other needs, another culture. Precisely those behavioral motives that have changed direct the activity of the main participants of the socioeconomic process, the main subjects of economic activity, to attain other values than they would have previously. In a period when the values of the hysteroid type dominate in society, they direct their efforts toward self-affirmation through ownership of new, large and prestigious homes, flashy cars, and trendy things… They savor their prestigious position, the availability of private airplanes, yachts, expensive watches, tennis courts etc. The list is endless. And here’s the important thing. Ownership of stock, playing the market, and bank accounts in unlimited quantities – the more accounts, the more prestigious – now end up on this endless list of the actualized needs of the hysteroids and post-postresonators. Other people somehow pale into insignificance relative to these values. This is a peculiarity of people with hysteroid traits, their need to display their Ego is more pronounced, the “by myself” metaprogram is more manifest. These values combine with less marked organizational capabilities. The need to control an endless list of objects of prestige, but more importantly, the symbols of prestige, owning shares of large companies that are completely unscrupulous about emotionally changing their costs – so that there is plenty to talk about in the ritziest salons – all this forms an endless need for money. And as always in history, this psychotype and all its imitators begin not to gain this money through hard administrative work, but by taking a cut from everyone who will consent. “Clipping” is easier for those who are toward the bottom of the ladder of prestige, of their professional or social position. It is precisely these whose profits are reduced during a period when the post-postresonators are dominant. Social separation grows in the society. And even if the government and regulators, seeing a pre-revolutionary situation, find the means to keep the people from losing their shirts, the money accumulates again by various means, sometimes subtly and shiftily, in the circulation of the values that are dominating in the society. Therefore the degree of social stratification in the society cyclically changes with the rotation of the psychotypes in the elite.

The laws of economics in a society where values of the hysteroid type reign supreme become different from what they were decades ago. The economic laws discovered at some point of social development metamorphose, transform along with the change in people.

There is reason to believe that knowing why psychoeconomic crises arise can improve the possibility of managing this process to a greater degree than before. In our set of measures for overcoming a crisis we should include those about the change of psychotypes of the economically active population and elite.