The Pendulum has Swung too far by Karl Wiggins

It goes back to the archaic myth of the eternal return: in many primitive religions and beliefs, everything moves in cycles, from the ordinary year to the renewed creation and destruction of the universe. The hypothesis of pendulum-like cycles is suspect for another reason. Of course, history is not finished and our descendants in thousands or millions of years may discover long cycles of commodity prices, wealth and poverty, liberty and tyranny, peace and war but then they may not. The beaver hat fashion of the 17th and 18th centuries may never come back. Solomou’s “Kondratieff Cycles” in the New Palgrave Dictionary of Economics). Even more modest long cycles are difficult to find: for example, the 50- or 60-year Kondratieff economic cycles have no micro-economic foundation and are not supported by empirical evidence (see S.N. Similarly, liberty and tyranny have not swung back and forth like a pendulum during the history of mankind: tyranny has been nearly universal while individual liberty has been a rare, limited, and mostly recent event. For an extreme illustration, no long cycle to be found in the evolution of world GDP per capita (see the chart below from my post “ Individualism and Western civilization”). The model of short pendulum swings is thus not very useful for understanding society.Ĭan we can identify longer pendulum swings (around which short-run fluctuations may happen)? Most likely not. If they were regular, they would be arbitraged away, which means that individual responses would dampen them: if I know that wokism is just a short-run phenomenon, I will feel less obliged to follow if many individuals think that the price of a stock will increase tomorrow, it will not because it will have increased before. In social matters, many, perhaps most, short-run fluctuations seem to be random or at least irregular.

Short-run fluctuations of stock prices, for example, cannot be likened to a pendulum swing. But if the short-run fluctuations are random or irregular, that is, impossible to reliably predict, the analogy is faulty.

If these short-run fluctuations show some regularity-like, perhaps, the consumers’ preferred car colors-the pendulum analogy may be good, provided we keep in mind that it is just an analogy. The first question to ask relates to the period of the hypothesized fluctuations, that is, how much time it takes for the pendulum to come back a short period or a long period correspond respectively to a short cycle and a long cycle.Ĭonsider regular or random fluctuations around a long-term trend. I suggest that this approach is easily misleading and seldom useful. People are often tempted to see social (including economic and political) phenomena in terms of a “swing of the pendulum.” In this perspective, problems such as wokism (just to give an example) will be corrected when the pendulum swings back.

The Pendulum has Swung too far by Karl Wiggins