Secular Cycles: "fiscal flows in real terms"

Secular Cycles by Peter Turchin and Sergey A. Nefedov

As I have noted, the authors use the language of our time to describe patterns that exist outside of time. They use economic and business cycle terminology to describe "secular" cycles that last perhaps 300 years: expansion and stagflation and crisis and depression. They also describe in modern terms problems that occur and recur over the past thousand years and more. For example:

 ... states have no choice but to seek to expand taxation, despite resistance from the elites and the general populace. Yet the amount of surplus production declines (as discussed in the previous section), and the state must compete for this shrinking surplus with increasingly desperate elites. As a result, attempts to increase revenues cannot offset the spiraling state expenses, and even though the state is rapidly raising taxes, it is still headed for fiscal crisis.

It is written as though it describes us and our time. It is not. The cases identified in the table of Contents include Russia since the 15th century, France and England since the 12th, and Rome before the time of Christ. The authors' style makes secular cycles more real for today's reader; and it suggests that the same things may be happening again, this time to us. It is almost deceptive.

But it is not deceptive. That the same patterns may be visible in our time is precisely the point of the book. Anyway, I think that if we were in the "expansion"phase of a secular cycle, the things they describe would sound great, and we wouldn't be at all troubled by their description. We are only troubled by it because Turchin and Nefedov seem to want to locate us in the midst of a troubled time.

Maybe the word "elites" doesn't seem quite right, but then maybe we're not quite as far along in the cycle as the description that I quoted.

As I see it, the book describes us and our time. We are indeed living through another of Turchin's secular cycles. History repeats itself. Or it doesn't repeat itself, but it rhymes -- as Mark Twain supposedly said. And the authors have found a perfect way to present their cycles in a way that makes us feel, for better or worse, it is now our turn at the wheel.

 

I was initially tempted to say that Secular Cycles is deceptively convincing because it is written in the language of our time, as an explanation of the problems of our time. But then I remembered a criticism of the great historian Rostovtzeff, by N. H. Baynes in "The Decline of the Roman Empire in Western Europe: Some Modern Explanations". Baynes summarized Rostovtzeff's argument and objected to it:

"The peasant of the army made common cause with the peasant of the countryside and both waged a war of extermination against their oppressors of the city. The explanation of the downfall of the aristocracy and with them of the ancient civilization is thus to be found in a class-conscious alliance between the soldier and the worker on the land. Professor Rostovtzeff, it must be remembered, has seen in his native country an aristocratic regime overthrown by a similar alliance."

 - In Decline and Fall of the Roman Empire, Donald Kagan, editor; page 83

Baynes, it seems, objected to Rostovtzeff's story of ancient Rome because the same story could be told of more recent times. But of course, that is the sort of thing one must describe, if one is describing a recurring cycle in history!

The next sentence, after the above quote from Turchin and Nefedov is this:

Note that declining real revenues may be masked by persistent price inflation, and it is therefore important to express all fiscal flows in real terms.

"In real terms" means "measured in prices that are unchanged by inflation" or measured in dollars of constant value, constant dollars we might say. Good idea. I hadn't thought of looking at federal spending in real terms.

Graph #1: Federal government Receipts 1929-2020
Blue = As Reported ... Red = Adjusted for Inflation

Note that the red line shows federal receipts "in real terms" running flat or slightly downhill since 2015. This is "masked by persistent price inflation" as the blue line shows.

Yes, indeed. Thumbs up for the Secular Cycles book.