Noah Smith: A big sweeping theory of modern history

Noah Smith describes his version of A big sweeping theory of modern history.

Here's a Big Sweeping Theory that I've been toying with. There are lots of theories of the cycle of rise and decline of empires in the agricultural, premodern world. I'd like to create a parallel theory of low-frequency cycles (or, more accurately, long-term impulse responses to stochastic technology shocks) in the modern, industrialized world.

It's possible to see the convulsions of the World Wars and the Great Depression as a one-time event — part of the growing pains of the industrial revolution, not to be repeated. But what if some of the core features of those events are actually part of a cycle? Here's a sketch of how that cycle might work:

Smith's model consists of seven (7) main phases:

1. Technological Change.
2. Globalization.
3. ?
1. Inequality.
2. Cultural Change.
3. Financialization.
4. Geopolitical Shifts.
4. Rise of Extremism.
5. Economic Slowdown.
6. War.
7. New Order.

The interesting thing is that Smith does not have an explanation for Phase 5: Economic Slowdown. Marxists do: the rate of profit declines below the necessary rate required for reproduction of Capital. In other words, Capitalists will not invest if the rate of return does not allow to get their money back within the foreseeable future. In normal times, this future is about five (5) years. In times of stress, this can drop to little as a year.

The alternative view of history is provided by Marx in which the driver of human history is class conflict. The economic organization of society creates classes which come into conflict over the distribution of the economic output. A political and ideological superstructure is created to contain this conflict. Breakdown of the system occurs when this superstructure cannot adapt fast enough to the changes in the economic organization of society.