What Tends to Happen at the End of a Vicious Cycle

I am an investment advisor, working for a fairly substantial firm (as such firms go), that I helped my two partners organize more than twenty years ago. The compliance policies I myself enforce upon our employees – and, so, upon myself – do not allow me to discuss securities except under the aegis of our firm’s publications and website. The following, accordingly, does not constitute a recommendation or offer either to buy or to sell any security, or any type of security. Indeed, it does not even mention any security, whatever. It is not a discussion of securities.

So much for the preliminaries.

The astounding run up in economic statistics – financial markets, employment, manufacturing jobs, consumer confidence, business confidence, you name it (even the Fed seems fairly sanguine) – since the beginning of the Trump Administration have taken many analysts by surprise. But they are just what one would expect to observe at the end of a vicious cycle, and at the beginning of a virtuous cycle.

Not to give too much credit to Trump, mind. Vicious cycles can’t go on forever, and we were overdue for the exhaustion of the vice that overtook us in earnest beginning in the late 90’s, at about the time that we finally adjusted to the shocking fact that Soviet Communism was no longer an immediate threat to our continued existence – that it was, in fact, just gone.

Indeed, Trump has happened in part because things had reached a cusp, and were ready for such a man as he. There is a tide in the affairs of men, that cannot be credited to Trump. Notwithstanding that, Trump deserves an awful lot of credit. If nothing else, he has managed to take that tide at the flood. And that is no small thing.

There are vicious cycles of long and short term. A long term vicious cycle will be characterized by numerous temporary periods of diminished economic and moral (NB: because they both denote defections from the good, these terms equivalate, in practice) vitiation, and vice versa. Put another way, a culture that is experiencing a long term decline will nevertheless enjoy periods of economic boom, rather than suffering a long unmitigated economic bust. And vice versa. When things are looking better and better for a people over the long run, they may still find themselves in severe pickles from time to time over the short. Think of Rome versus Carthage. And when things are looking worse and worse for a people over the long run, they may still find themselves waxing geopolitically over the short. Think of Justinian versus the wayward Visigothic provinces of North Africa – and, a fortiori, the looming threat to those incredibly rich and fertile lands posed (who could possibly have foretold it?) by the pagan savages of the Arabian hinterlands.

Long term decline need not moreover utterly pervade a culture. It is rare that just everything is getting worse and worse. On the contrary, it is almost always true that some things are getting better and better, even as things in general decline; and vice versa. E.g., the increase in social chaos since 1968 has been accompanied by tremendous technological advances. In many ways, life is much better for most Westerners than it was in 1950, despite the fact that in other, deeper ways, it is horribly worse.

A people can harvest bumper crops year after year even as the barbarians encroach upon them ever more and more. Indeed, there would seem to be a straightforward positive correlation between repeated bumper crops and vulnerability to predation. As bank robbers rob banks because that’s where the money is, so nomadic raiders invade prosperous poleis because that’s where the prosperity is. And wealth coddles, thus weakening. Rich prey are usually soft.

None of that is controversial. No more likewise is it controversial – or, rather, no more ought it in plain common sense to be controversial – that there can be brutally hot summer days even during the onset of an Ice Age.

From my perspective as an ill-read amateur economic historian, it looks as though the West has been in a long term economic and moral decline since the end of the Belle Époque in 1914 or so.

That statement wants a word of explanation. An economic decline since 1914 or so? Is that not rather a mad thing to suggest?

Not at all. The question is not whether the present wealth of the West is massively greater than it was in 1914 – it most assuredly is – but rather whether our present wealth is as great as it would be, had we not in 1914 or thereabouts begun a precipitous descent into *moral* confusion and error. We are much wealthier and more powerful than we were in 1914. But we are much less wealthy and powerful than we might have been, had we made better decisions.

The Arabs, too, after all, are much wealthier and more powerful than they were in 1914; so are the black South Africans. That this is so does not mean that they could not have been far wealthier and more powerful than at present they are, had they not adopted policies more apt.

The roots of our decline lie of course much further back in our history, but never mind that for the nonce. We might date its beginnings somewhat earlier – 1860 suggests itself, as so do 1840 and 1789 – but, again, never mind.

We’ve had a ton of history since any of those dates, obviously, and many of both booms and busts. But mostly that’s been weather, rather than climate.

My concern in this essay is not to ascertain when our long term decline began, or exactly why, but rather simply to wonder: what might we expect if that decline were suddenly to come to an end, and things were to flip back suddenly to a regime of incline? What if things stopped getting worse and worse all the time, with here and there a light of bright hope shining amid the prevalent deepening gloom, and instead started getting basically better and better all the time?

There’s really no way to tell. Almost all our information about the way economies and markets behave dates from the early 20th Century. We don’t have any idea what it is like to live in an economy where things are getting systematically, fundamentally, organically better. All our statistics tell us what it is like to live in an economy where things are getting better and better in this or that respect (GDP, disposable joules/capita, caloric surplus, input bits/decision, and the like), amid a context of overall moral and (therefore, as night follows day) hedonic decline.

Excursus: hedonic decline can worsen even as objective measures of wealth improve.

A hedonic decline *just is* an economic decline.

Excursus: the proper term for a unit of economic value is not the “utile” now prevalent among economists, but “hedon.” The former is, after all, a mere adjective, while the latter is a noun. That consideration alone should be dispositive.

I realize that I am in this asseveration controverting the main current of custom. This, in just the way that I insist that the neoreactionary “Cathedral” should properly be replaced with “Moloch,” and “manosphere” with “androsphere.”

So be it. What’s right is right. I can’t argue with what is right. Where custom is inapt, so is it damned.

What this means is that all our inditia of economic overheating – which more and more foretell an economic contraction as things get better and better – are predicated on a milieu of general cultural decline. In a milieu of cultural, economic, moral and (so) hedonic incline, they are mere noise.

Excursus: e.g.: when things get better because the friction imposed upon commercial operations of compliance with regulation drops systematically, the pressure on the real factors of production is zero. No, that’s wrong: it’s negative. A reduction of regulation does not only reduce accounting and economic costs, it liberates factors of production from absorption in the tasks of compliance so that they can be allocated to the generation of value. A dollar of savings on compliance expenditures is worth at least two dollars of increased production of value.

Thus there is no way we can tell how good things might get if America began to be Great Again (to take only the most famous example of this phenomenon of cultural resurgence now more and more evident throughout the West (including Russia (of course))), before operations began to overheat and slow themselves, prompting a correction.

In a milieu of general hedonic incline, wherein things are getting more and more proper, correct, and righteous, each good development sets the stage for yet better developments.

In such a situation, the better things get, the better they can then get.

To put it bluntly, and in the simplest terms: in a milieu of general hedonic incline, the sky is the limit. Nothing grows to the sky, of course. There will certainly be a correction, sooner or later. But there’s no point in trying to figure out where that correction might be based on econometric statistics derived from a milieu of moral decline. And our notions of the limits of economic prosperity founded upon statistics derived from a milieu of general moral decline can have nothing to tell us about what it might be like to live under conditions of general moral incline.

Think of that; let it sink in. The limit of our present economy is not set by our experience with the Carter administration, or the Obama administration, or even the massively bullish Clinton and Reagan administrations. The limit of our present economy is set by the sky.

Not to wax all Polly Anna, of course. No one is so jaundiced as an investment advisor who has survived the crashes we’ve all suffered since 1985. I speak as such an one; as a jaundiced, cynical, generally bearish sort. All sorts of things could derail us. It’s lots easier to screw up than to get things right.

Still. Still. Perhaps best not to bet on catastrophe; perhaps best not to bet on total cultural collapse. Not just yet, perhaps.

24 thoughts on “What Tends to Happen at the End of a Vicious Cycle

  1. >>Still. Still. Perhaps best not to bet on catastrophe; perhaps best not to bet on total cultural collapse. Not just yet, perhaps.<<

    Bet on it? No. But bet against it? Another no.

    The old saying to hope for the best, but prepare for the worst is apt.

    My family is moving to a new property. I'll be planting a lot of fruit trees. The ability to feed yourself is always a good investment.

    • Right. Prepare for the worst, hope for the best. But, don’t bet on the worst. The only reason to bet in the first place, after all, is the presumption that there is a better that might be harvested by the bet. And life as such is a bet on the good prospects for life as such.

      The only way to bet on catastrophe is to short the alternative, and thus to help prevent it. The only way to carry pessimism into practice is to begin to destroy your own life.

      To plant trees is to bet that there is a future for you and your family – a future that is good, and worth a capital investment. To prepare for the worst *just is* to hope for the best.

      Be sure to plant some nut trees, too.

      • There’s an old saying attributed to Martin Luther about planting trees even if the world was ending tomorrow. We don’t know what tomorrow brings, so we need to live in the now, making plans for the future.

        And, nuts, yes. I have plans for pecans and hazelnuts.

      • Aye. For, nothing is wasted. Good enacted is permanent, in just the way that a thing of beauty is a joy forever. What we plant in time flowers in eternity.

    • Bet on it? No. But bet against it? Another no.

      Betting is mandatory in the way gravity is mandatory. If you think you are not betting, that just means you are betting blindly. From what you go on to say, though, I guess by “betting” you mean here “go all in on one bet,” though, so I suppose we don’t disagree.

      • Indeed. If you think you’re not betting, you’re actually betting that everything is going to continue in a state when a change of action is not required. Inaction is still action.

  2. Pingback: What Tends to Happen at the End of a Vicious Cycle | @the_arv

  3. Pingback: What Tends to Happen at the End of a Vicious Cycle | Reaction Times

  4. While I hope for Trump to be Charles the Hammer or Charles the second, a more likely hope is for him to be a Stalin, a Cromwell, or better than a Cromwell, a Deng. All of whom were the start of a long term trend of things getting better.

  5. “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair…” (Charles Dickens, A Tale of Two Cities, 1859)

  6. The limit of our present economy is set by the sky. — Kristor

    I’ll interpret this as you saying that your desire to gain credibility, i.e., hard (C)apital, is unlimited due to the falsehoods you will reject and the truths you shall behold.

    • Actually I meant only that based on the statistics we now have on modern economic performance, we can’t have any very clear idea of the limits to the growth of our prosperity.

      • But.. There are no real limits to the growth of our prosperity if by “growth of our prosperity” you mean our desire for hard (C)apital, ie., real credibility, and so any sort of “statistic” will give the false impression of limitation.

        Again… There are no real limits to wealth that are not ultimately self-inflicted. In fact, in the most hellish of times is the greatest opportunity to attain hard (C)apital when a fearful mass is desperate for men of exemplary credibility.

      • The very intention of this post is the oh-so-subtle desire of Kristor to gain hard (C)apital, ie., greater credibility. And there are no material limitations to this desire. Going even further and cultivating this desire for hard (C)apital all the way to (P)erfection and one has STILL NOT REACHED any sort of limitation.

      • This is why socialists are such wretched creatures. Their advocacy of “socialism” is a play for hard (C)apital in the name of anti-capitalism.

      • Thordaddy, you’ve transposed the essay into a higher key. I won’t dispute what I am pretty sure you are saying, because if I am correctly interpreting you, I agree.

        Credibility is social power – is social credit. We credit the man with authority – we believe him – and so we follow his advice and his commands. We take him to be authoritative: such is his Capital, entirely, for his ownership of goods or employment of men depends entirely upon the assets credited to him by his fellows. And we take him to be authoritative because he has about him the air of veracity, and so (at least a bit) the odor of sanctity. And he has this air and this odor only on account of his apprehension and honest transmission of Truth. Truth convicts without need of supporting arguments, useful as those arguments are in clarifying our thought and driving out uncertainties. It rings. We all recognize that ring, for the True calls out to the truth that is in and expressed by all things, howsoever dimly or darkly, and resonates in them as they were a tuning fork responding to an ambient tone. The encounter with Truth provokes in some a joyful relief as at a confusion cleared up, and in others an angry rebellion – depending upon the spiritual attitude of the auditor; for, Truth reproaches even as it welcomes; its welcome is by way of a reproach. There is no way home to the Truth without acceptance of its correction of our errors.

        The nominalism of the socialists and other moderns is an attempt to avoid the uncomfortable encounter with the reproach of Truth. It avers that there is no such thing. It avers that there are no particularly authoritative men. It avers that there is no Capital. It avers that there is no social order. Indeed, on Marx’s own account, the apotheosis of the Communist material dialectic of history is reached at the dissolution of all social order – at the disintegration of society.

        Thus the socialist drive to destroy all the authoritative institutions that intervene between the individual and the State. When the State has at last succeeded in this, it will itself wither away, leaving only individuals. Then everyone will have exactly the same amount of hard Capital.

    • It’s hard to spot just yet. But business and consumer confidence are pretty close proxies – as close as we can get, so far – and they are very high right now.

  7. What if things stopped getting worse and worse all the time, with here and there a light of bright hope shining amid the prevalent deepening gloom, and instead started getting basically better and better all the time?

    So, my confessor was worried about me and my overall trajectory one time. The Penance he gave me was to pray for suffering. I haven’t got the suffering so far, which is pretty worrisome.

    A hedonic decline *just is* an economic decline.

    Which means that an economic decline is not always and perhaps not generally a bad thing.

    • It is not, indeed. A decline can be purgative. But as there is a difference between the temporary illness of an otherwise healthy man and his last descent toward death, so there is a difference between a period of decline in a milieu of general economic health, and a long term decline that tends toward cultural death. We’ve been in the latter sort of decline for the last century, at least. What might it be like to emerge from it, and begin to return to health? Hard to say; but, lots and lots better.

  8. “whether our present wealth is as great as it would be”
    A lot of present wealth derives from technology that was developed in military context. Electronics, computers, jet flight,internet etc.
    A future that had peaceful 20C perhaps would be delayed in developing these technologies.

    • That would not perhaps have been an altogether bad thing. It might have resulted in a much nicer society, and life, than we now have – and a much better. I remember the fifties, when none of the things you list had yet had much of an impact upon the daily life of ordinary citizens. It was quite a lovely time to be alive.

      • Kristor. I think America peaked in 1955. I was 21 years only and in the Dominican Novitiate in Winona, Minn. There was was something perfect about all of that. And then………………life got real.


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