Industrial Cycles, the Current Crisis of Capitalism, and Adapting to the Future

March 13, 2012

Tecnológico de Monterrey

Campus Querétaro

The Causes of the 2008 Panic and

Subsequent Economic Crisis

Washington Mutual, many financialinstitutions chasing after greater profitsand taking bigger risks with housingloans.

Variable interest to NINJA loans. Thebubble and the largest bank failure inAmerican history.

10% of all US business profits in

1980, 40% by early 2000s from

financial industry.

Mortgage backed securities,

complex derivatives, dishonest

ratings agencies (Moody, S&P),

Fannie and Freddie.

Cascading effects of burst

bubble, loss of confidence, Lehman

and liquidity crisis.

Crash in 2008, world depression

narrowly averted by US actions.

But there are deeper causes.

Industrial Cycles

Dates of

cycles

Leading

Products

Dominant

Areas

Crisis

Moments

First:

1780s-

1840s

Textiles Great

Britain

Revolu-

tions from

1789-1848

Second:

1840s-

1870s

Railroads,

iron

telegraph

Great

Britain

Depression

of the

1870s,

labor strife

Dates Leading

Products

Dominant

Areas

Crisis

Moments

Third:1

870s-

1910s

Chemicals,

steel,

electrical

machines,

research

Germany,

United

States

Colonial

race,

military

arms race,

nationalism

and World

War I

Dates Leading

Products

Dominant

Areas

Crisis

Moments

Fourth:19

20s- 1970s

Autos,

petro-

chemicals,

home

electrical

goods,

airplanes,

services

United

States

Depression

of 1930s,

World War

II, anti-

capitalism

of fascism

and com-

munism

Dates Leading

Products

Dominant

Areas

Crisis

Moments

Fifth:

1970s-

2010s

Electronics

and

computers,

health care

USA, West

Europe,

Japan, parts

of East Asia

Commu-

nism falls,

ethnic strife

resistance to

modernity,

crash - 2008

Dates Leading

Products

Dominant

Areas

Crisis

Moments

Sixth:

2010s-

2050s?

Program

organisms?

nano-tech,

bio- tech?

energy?

Education /

research?

China?

India?

Europe?

USA?

China/US

as rivals?

Religious

wars?

Ecological

change /

climate?

Gini coefficient of income inequality

(1.0 = perfect inequality, 0 = perfect

equality)

Poorer Countries

Emerging and Middle Range

Countries

Rich Countries

Poorer Countries Average = 51.1

Bolivia 59, Guatemala 55,

Haiti 59,

Kenya 43, Nigeria 44,

Zambia 51, Mozambique 47

Emerging/Middle Range Countries

Average = 47.9

Mexico 48, Argentina 46,

Brazil 57,

China 42, India 37,

Malaysia 46,

Russia 42, South Africa 65

Rich Countries Average = 32.7

USA 45, Canada 32,

France 33, Sweden 23,

Germany 27, United Kingdom 34,

Netherlands 31,

Japan 38, South Korea 31