Seven Oaks Magazine.

From a quiet downtown office Ian Gordon looks down on the whirl of Vancouver’s business district but can’t make himself believe that what he sees each day, just a few meters from his window, is real. He can see the cranes and the condos and the Dow Jones at 10,000 just fine but when Gordon examines the planet’s mighty economies he can see only a smoldering ruin. It may seem a strange vision for a Vice-President inside Canaccord Capital -- one of Canada’s major brokerage houses -- but Gordon thinks he knows something terrible: The world’s economic order, as we know it, is coming to an end. To be confronted with the theories Gordon embraces they have, at first, the flavour of some World Weekly News headline; “World Economy to CRASH”. He is not, however, a half bent conspiracy theorist or even a dull Marxist prognosticator. For 20 years Gordon has toiled in capitalism’s boiler room happily joining in on the feeding frenzy of modern investor culture all the while knowing, thanks to a long dead Russian economist, that golden promises tarnish and media fables always arrive at an unhappy end.

Nikolai Kondratieff had the misfortune of being born with a remarkable proficiency in numbers. This may not seem to be much of a curse and, in fact, Nikolai put his skill to good use rising to become Russia’s foremost economist. He was so good that Lenin called on the young Nikolai to prove, in economic terms, capitalism’s inherent weakness. Nikolai tried, he factored in data from the rise of the modern market around 1789 until the 1900’s, finally postulating in 1926 that capitalism was in fact stable and would survive indefinitely moving in great generation-long cycles. It was a remarkable achievement and was hailed genius after his predicted crash of 1929 occurred. Unfortunately he timed the release of his theory at the same moment Stalin seized control of the Soviet Union leading to Kondratieff’s exile and death in a Siberian prison camp. The ’29 crash was seen by many as the end of the market system, but Kondratieff believed it was part of the system itself, a means of cleaning the debt built up during the first three quarters of its cycle. Gordon calls these periodic crashes the winter of the cycle.

“The real indication of when you enter winter is really the peak of stock prices at the end of autumn.” Gordon said from his Granville Street office. “The autumn period is always characterized by the biggest bull market in stocks of your lifetime.”

In less than 6 years in the 1990’s the Dow Jones jumped from 4,000 to 10,000 points the product of a feverish speculative market that came to be known as the dot-com boom. By the end of the decade the market was in shambles and Kondratieff’s winter seemed to be taking grip just as it had 70 years earlier. But this time it didn’t happen. The market recovered, slowly inching back up to above 10,000 points. There are several reasons why a repeat of ’29 did not occur, Gordon says, but the most important is Federal Reserve Chairman Alan Greenspan. Gordon alleges the Fed is trying to override the effects of the winter by lowering interest rates and printing massive amounts of money.

“He’s got interest rates down to almost zero and he’s flooding the banking system with money to the extent that we could see the money supply increase by $2-trillion this year alone. What he’s doing is creating the biggest debt bubble, probably, ever.”

The amount of debt currently in the system defies belief. The United States government alone increased its debt from $2.5-trillion to almost $6-trillion during the 90’s becoming the largest debtor nation on the planet. Greenspan’s efforts to forestall the winter are, Gordon said, futile.

“Not only do I think it’s futile as I think it’s compounding the problem and contributing to even more debt.”

It is a stark reversal of roles for the US. In 1929 as the world’s creditor America made a tidy profit by financing Europe during World War I. After the crash America took over economic primacy from the near-bankrupt United Kingdom. In 2004 the world’s largest creditor is Japan and that, Gordon believes, means a complete reshuffling of world order if a massive economic collapse occurs.

“There’s no way the leading debtor nation in the world can maintain the dollar as the world’s reserve currency. That always goes to the largest creditor, Britain in the 1800’s America in the 1900’s, one would assume that when the winter comes to its conclusion Japan will become the leading economic and financial power.”

For many it seems ludicrous to suggest that America will ever be anything but the dominant force on earth. The scope of its military might – with a current annual budget of $400-billion - combined with the lure of its cultural jingoism creates the illusion of invincibility. Political dissident and death row inmate Mumia Abu-Jamal has famously reminded us that “today’s empire is tomorrow’s ashes” but how many truly believe America’s fall will happen in their lifetime? How about within the next 5 years?

“In 1929 the market peaked but it wasn’t until ’31 that things started to unravel.” Gordon explained. “That came with the failure of the Credit-Anstalt bank in Austria. When that happened it basically took Austria and Germany down and very shortly thereafter England went down. My feeling is it’s going to be some sort of major credit problem that’s going to occur that’s really going to hurt confidence (in the markets) and you could see a panic.”

A small song can be heard inside the heart of many a leftist at the mere suggestion of America’s downfall. The truth is if the Dow Jones were to lose 90% of its value, as it did in 1929, most of the middle and lower classes would be wiped out while the rich remained rich. 70 years ago 5% of the population was invested in the stock market, today that figure is at nearly 50%. Pension plans, university funds and individual credit would disappear.

The slump of the 1930’s helped to produce the modern welfare state – The New Deal in America, Medicare in Canada - but Greg Anderson, a University of Alberta political scientist, doesn’t expect a leftist paradise if the economy disintegrates once again. He points out that the there was not a massive rush to radical organizations like the Socialist Party after the ’29 crash. For Anderson a large economic crisis wouldn’t be enough to reshape the entire political landscape. That would only come if another mass casualty attack occurred on US soil.

“If there was a really large terrorist attack that’s when all bets are off.” He said. “Then you could really see a knee-jerk reaction, depending on what happened, you could see a massive swing in public opinion just out of fear.”

Anderson, who was educated at Johns Hopkins University in Baltimore, doesn’t buy into the Kondratieff theory simply because economic models tend to break down when confronted with the sheer size of the American economy and its ability to manipulate the world system.

“If you do your little chalkboard economics and you say ‘this is what should happen’ but that isn’t what’s going on. In some ways America fits into another category, at least, at this stage in its history.” He said.

Whether or not the Kondratieff theory is valid Anderson does admit the American Empire is in general decline and will likely be overtaken by the Chinese, Japanese or European Union within the next 20 years. For the activist the question now becomes how to operate in a landscape without America to blame for all the world’s ills. Modern lefties have been accused of worshiping style over substance, a fact pointed out by Joesph Heath and Andrew Potter in This Magazine.

“ At this stage of late consumerism, our best bet is legislative action.” They wrote in the November 2002 issue. “If we were really worried about advertising, for example, it would be easy to strike a devastating blow against the “brand bullies” with a simple change in the tax code. …This little tweak to the tax code would have a greater impact than all of the culture jamming in the world. Of course, tax code activism isn’t quite as exciting as dropping a “meme bomb” into the world of advertising or heading off to the latest riot in all that cool MEC gear.”

Growing up in the gluttonous glory of the 80’s and 90’s it was easy to believe that the party would continue forever. It is clear, however, that a massive depression is not an impossibility. How this Latte-fueled culture of super-consumers would react to such a disaster is anyone’s guess. For the activist the question may be simply this: “Are you ready for the winter?”