THE RISE AND FALL OF CIVILIZATIONS

 

PART I

 

December 2001

 

By

Joseph M. Miller
jmiller585@mchsi.com

Daan Joubert
daanj@kingsley.co.za

Marion Butler
juneb01@msn.com

 

 

EXECUTIVE SUMMARY

 

In 1999 three men came together with an idea for a research project concerning the Elliott Wave Principle. They reasoned that since R. N. Elliott found waves of varying size and described them from very short (which he called sub-minuette), to relatively large (which he called a Grand Super Cycle that lasted several hundred years), that waves of still larger magnitude were probably also present in recorded history. These men set about to learn about the possible existence of longer waves and learned that Elliott Waves of very long duration do actually exist. The longest wave they found was one that lasted about 10,000 years.

 

The result of this research was the publication in late 1999 of a paper titled 12,000 Years of Elliott Waves. This current effort is the second update of the original article. For the authors, the most important wave discovered, from the perspective of the current point in time, was one of approximately 1,000 years that was named a “X Wave”.  The very important consequence of this discovery is found in the fact that in the period between 1998 and 2001, both a Grand Super Cycle and a X Wave are coming to an end. This fact implies that we are ending a bull market cycle that started about 1,000 years ago with the attendant fact that we now face a correction of this long bull market. The Elliott Principle states that after a bull move there must follow a correction commensurate with the degree of the previous bull move. The research work uncovered the unsettling fact that a correction of a 1,000-year bull market (X Wave) would require a correction wave lasting up to 100 years, if history repeats itself during the 21^ST Century.

 

This was a shocking and disturbing finding for the researchers, as we are certain it will be for people reading this article. The implication of this research is that we should expect human and economic activity to atrophy by a very large degree during most of the 21^ST Century. This finding and conclusion is directly opposite the belief of most of humankind in the last half of 2001. Most people currently believe the 21^ST Century will be an almost unbroken period of economic and human expansion with living conditions becoming better and better as time goes by.

 

If the reader is still with us at this point, we sincerely believe it will be in your future best interest to stay with us and to read our research reports in their entirety. Only in that way can you determine for yourself if our research is accurate and timely. If we are correct, and we feel we are correct, and that current events* are pointing toward the correctness of our research and conclusions, then ignoring our work and our findings can be injurious to your future financial wealth and well being. The choice is obviously yours.

 

*In the research for the original article completed during 1999, it became obvious that there was evidence supporting a belief that at the end of a long bull market wave (such as a 1,000-year X Wave), one of the contributing factors (if not the major factor) initiating the bear market decline was a phenomenon that historians have called “The Barbarians at the Gate” syndrome. In the last few years, and especially since September 11, 2001, it has become obvious the terrorist attacks on Western Civilization can certainly be considered the modern equivalent of the historical accounts of “Barbarians at the Gate” of previous civilizations prior to their decline. This current update of our research deals with that aspect of the current world situation.

 

The original article 12,000 Years of Elliott Waves can be found at:

http://www.freebuck.com/articles/elliott/00years1.htm

 

Our first update A Revisit of 12,000 Years of Elliott Waves can be found at:

http://www.freebuck.com/articles/elliott/00revisit.htm

 

Elliott Waves and Monetary History can be found at:

http://www.freebuck.com/articles/elliott/00monetaryhistory.htm

 

 

PART I

 

Introduction

 

In a previous article, 12,000 Years of Elliott Waves, we outlined the advances and declines of Western Civilization from the beginning of the Neolithic Age to the year 1999.  The Neolithic, or New Stone Age, spanned some 6,500 years, from about 10000 BC to about 3500 BC.  After the Neolithic, civilization advanced during four periods, each lasting roughly a millennium, that we term “X Waves”.  The first three of these most recent X Waves were each followed by a decline lasting several centuries (see Table below), while the fourth advance is from 1000 AD to the present. 12,000 Years of Elliott Waves concluded that a decline lasting in excess of a century, similar to previous X Wave declines, is imminent.

 

(Refer to the original article for a complete explanation of the wave count numbering system. X waves are the next higher order after Grand Super Cycle waves (GSC), with Y and Z waves of even higher order.)

 

 

Advances and Declines from 3200BC to 1000AD

 

 

After the terrorist events on September 11, 2001 the idea of another update to our work was discussed that would focus on the character of the coming X Wave Bear Market, taking into consideration the added ramifications of these events. We felt such an update would be helpful in preparing for the possible developments that will take place during the decline. History had shown to us during our research that one important cause of all previous X Wave declines was an assault on the civilized zone by nomads and semi-nomads from the fringes of civilization.  This aspect of the current X Wave decline was missing until September 11, 2001. Since September 11, 2001 it has become unmistakably apparent that a modern version of the historical concept of “The Barbarians at the Gate” has descended on modern Western Civilization, with all of the terrible ramifications that implies.

 

This paper will examine the risks associated with the peak and aftermath of ascending X Waves, the cause and extent of subsequent declines, and advice for preparing for the imminent next decline. This is a complex subject that requires a great deal of explanation that will be presented in the following paragraphs and sections.

 

Areas of Risk: The Agricultural Revolution

 

Human advance during the Neolithic, 10000 BC to 3500 BC, was due to an agricultural revolution during which mankind became reliant on the domestication of plants and animals.  In 12,000 Years of Elliott Waves we described the risks associated with this revolution as follows:

 

1)      Degradation of the soil.  Overgrazing and failure to rotate crops caused many of the earliest settled areas to become desolate regions even to this day.  Much of the world’s deserts are man-made.

2)      Disease.  Increasing human population in closer proximity brought the risk of epidemic.

3)      Famine.  Man became dependant on weather.  Crops were also at risk from insects and other animals.

4)      Pollution.  Towns developed long before sanitation.

5)      Loss of freedom.  Freedom of movement was lost in the transition from nomadic to settled life.

6)      Security problems.  Settled life creates wealth, which in turn creates security risks.  The development of town walls testifies to this threat, particularly from nomadic groups on the fringes of civilization.  This was a primary cause of the Bronze Age declines and persisted as a threat at least through the Mongol conquests of the 13^th Century.

7)      Class strife.  Settled life creates economic classes.  This can lead to oppression of the lower classes by the elites (evidenced in Gilgamesh) and uprisings by the lower classes against the elites.

 

These risks are reiterated here for two reasons. 

 

First, the agricultural revolution is not simply a prehistoric event associated with the Neolithic.  It has spanned the entire course of human endeavor from 10000 BC until the present time.  Consider that as recently as 1800, 80% of the workforce in the USA, 85% worldwide, was engaged in agriculture.  By 1900 these figures were 38% and 70% respectively.  By 1950 the figures were 13% for the USA, 60% worldwide.  Presently, according to the UN FAO website, the percent of workforce employed in agriculture is about 2% in the USA and about 22% worldwide.  The agricultural revolution accelerated in modern times, and is reaching an ultimate limit where only a tiny fraction of the population produces food.  Since the risks associated with an advancing wave reach their maximum threat at the height of the wave, it stands to reason that the risks associated with the agricultural revolution are at a maximum threat level right now.

 

Second, all of the causes of previous X Wave declines are associated with the above risks, assuming we expand the definitions slightly.  Doing so also provides the areas of risk we face today.

 

Degradation of the Soil

The process of desertification continues.  In addition, modern society does more damage than over-utilizing land.  We are also dependant on non-renewable resources such as oil and natural gas.

 

Disease

In addition to the previous threat of natural epidemic, modern society faces the threat of biological warfare.  Population is denser than ever, and the spread of disease can be rapid with the existence of air travel.

 

Famine & Dependence on Weather

The risk of global famine is higher than at any time in history, and it is growing worse daily.  Some 2 billion people, one third of the world’s population, already lack adequate food. Given current trends, it is forecast that by 2050 over 4 billion will lack adequate food, virtually half of the 9.3 billion people expected to then live on Earth. 

 

In this category we include the risk of climatic change and natural disaster, such as earthquake and flood, which played a role in some previous declines.

 

Pollution

Regarding the Neolithic, this referred to simple sewage problems in the farming villages and early towns.  This problem became much worse in the larger cities that bloomed during the Bronze and later ages. For the modern world, this covers a multitude of problems.  Air pollution claims the lives of 3 million people annually, while deaths from poor sanitation and unclean water are some 12 million people per year. And we also have the effect on the ozone layer, among others.

 

Loss of Freedom

For the Neolithic, this referred to the lost freedom of movement as settlements were established.  As society becomes more regimented and centralized, additional freedoms can be lost.  Excessive expansion of government and superstructure, excessive regulation, and the excessive taxation that accompanies it, have contributed to previous declines.  Fiat credit money systems and credit bubbles can be included here, as they are often the result of overextended governments spending more than they have available, at the height of their glory (see Elliott Waves and Monetary History, URL above).  Also, at peak periods of civilization, license may replace freedom, bringing decadence and moral decay. 

 

In addition, this category can be expanded further to include other risks inherent in large complex systems.  For more on this subject we recommend the book The Coming Dark Age by Roberto Vacca, translated from the Italian by J.S. Whale, and published by Doubleday, Garden City NY, 1973.  The Coming Dark Age describes modern civilization as a complex enterprise that is growing too large and unwieldy to survive without a major decline and reorganization.  Vacca’s main thesis is that world population growth and the infrastructure that has been erected to sustain this population cannot grow indefinitely.  Sooner or later it will topple of its own weight.  The book suggests that the decline of civilization will take about 100 years before a rebirth can take place.  (This is the same time frame the Elliott Wave Principle suggests is in our future for an economic decline.)

 

The book is long out of print and may be hard to find.  If a reader cannot find the book and still wants to read it, a condensed version can be obtained from one of the authors of this article by making an email request.  An interesting and alarming aspect of Vacca’s book, is his suggestion that the decline he foresees will likely begin by what he describes as a knock out blow to Western Civilization.  One cannot read the book without wondering if the terrorist attack on the United States was such a knock out blow.

 

Security Problems

There are two threats here: 1) attack by one civilized country against another and 2) attack against the whole of civilization by peoples opposed to it from outside. 

 

The first threat is greater today than ever, with unstable nations possessing nuclear weapons, and capable of triggering nuclear holocaust.  No previous civilization had the capability of destroying the entire world. 

 

The second threat, however, has proven more deadly to civilization than wars between nations.  In 12,000 Years of Elliott Waves this threat was defined as nomads.  If we expand this definition to include people opposed to the whole of civilization, it is no longer a threat that died with the Mongol Hordes.  It is a very real threat once more in the current Terrorist War being waged against Western Civilization.  President Bush had this to say on the subject in his speech on November 8, 2001 – “We wage a war to save civilization itself.”

 

Class Strife

This threat waxes and wanes over the millennia in proportion to the percentage of available wealth held by the elites, and the extent to which they abuse their wealth when they control virtually all of it.  Since X Waves measure the wealth of Western Civilization and its precursors, and since wealth is maximized at the height of an X Wave, and since history has shown the elite groups have the maximum percentage of wealth at the height of an X Wave, and since we are experiencing all of these conditions at the height of an X Wave now, this risk is again near a maximum level today.

 

The risk of class warfare in developed countries appears remote at this time, although periodic low-level civil strife has occurred for decades.  Elsewhere, many see America, and other rich nations, as the world elite.  These richest nations, with 20% of the world’s population, account for 86% of private consumption. The majority of people in developing countries lack basic sanitation, while one in three lack clean water.  Meanwhile, population is expected to triple over the next half century in the poorest 49 nations, from 668 million to 1.86 billion.  Perhaps the threat of class warfare that previously plagued individual societies, is now represented by threat of a global war – and not necessarily always a shooting war – between rich nations and poor nations.  This is another possible view of war between America and Afghanistan.  No American would see it that way, but others might, and therein lies the danger.

 

Meanwhile, some of the wealthiest individuals in the world reside in relatively poor nations.  In such countries, the risk of revolution, as this crisis unfolds, should not be underestimated.  Saudi Arabia is a primary concern in this regard.  The consequences to the West, should Saudi Arabia and its oil-rich neighbors fall to the extremists, are unimaginable.  Even the new oil discoveries east of the Caspian Sea lie in a politically turbulent region.

 

These are the areas of risk we face, and have faced, since the Neolithic.  Besides the threat expressed for each risk area alone, these risks can interact with each other in nasty ways.  For example, the risk of famine is exacerbated by the risks inherent in large complex systems.  A large civilization includes regions needing imported food to survive.  This was the case of Italy during the period of the Roman Empire, and it is true of some regions of the world today.  Thus, in the case of Rome, disruption of grain shipments could lead to famine, resulting in civil disturbance and increased class strife.

 

Levels of Risk and Wave Order

 

The composition of the larger order Elliott Waves is as follows.

 

·        An ascending Z Wave lasts approximately 10,000 years and is composed of 5 Y Waves. 

·        Waves Y1, Y3, and Y5 are ascending waves lasting approximately 3000 years, while Y2 and Y4 are shorter descending waves of about 300-400 years. 

·        An ascending Y Wave (Y1, Y3 or Y5) is composed of 5 X Waves. 

·        Waves X1, X3, and X5 are ascending waves lasting close to a millennium, while X2 and X4 are shorter descending waves. 

·        An ascending X Wave (X1, X3, or X5) is composed of 5 Grand Super Cycle (GSC) Waves. 

·        Waves GSC1, GSC3, and GSC 5 are ascending waves about 300 years long, while GSC2 and GSC4 are shorter descending waves.

·        An ascending GSC Wave (GSC1, GSC3, or GSC5) is composed of 5 Super Cycle (SC) Waves. 

·        SC1, SC3 and SC5 are ascending waves about 70 years long, while SC2 and SC4 are shorter descending waves.

 

 

The Great Depression of the 1930s is an example of a descending Super Cycle (SC) Wave.  The 60-year British bear market of the 18^th Century is an example of a descending Grand Super Cycle (GSC) Wave.  The Intermediate Bronze Age and Early Iron Age (both lasting centuries) are the known examples of descending X Waves.  The Roman period was the last ascending X Wave (X5) of the last ascending Y Wave (Y5) of a Z Wave.  Therefore the Fall of Rome and the Dark Ages, lasting 7 centuries, was a descending Z Wave rather than a descending X Wave.  (It was two wave orders higher than a descending X Wave.)

 

Every ascending Elliott Wave, of whatever degree, is followed by a corrective wave of the same degree.  This logically implies that a large degree wave will have a longer and deeper corrective wave than waves of smaller degree.   But specific developments are dependent on the character and actions of individuals and nations.  To put it another way, systemic risk increases at successively higher wave orders.

 

History has shown, generally speaking, a Super Cycle decline brings the potential for severe recession or depression: collapse of excessive debt, increased bankruptcies, major stock market decline, reduced economic activity, and increased unemployment.  With a Grand Super Cycle decline, the risk level increases to include national debt default, collapse of fiat money systems (including precursor systems), and radically changed forms of government.  With X Wave declines, the risk level increases to include extinction of major nations, collapse of international trade, disappearance of luxury goods, and decline of architecture (reduced monumentality, size, and quality of buildings).

 

These risks describe the typical – but not inevitable – developments associated with each wave order.  For example, as we showed in 12,000 Years of Elliott Waves, Grand Super Cycle declines often bring radical change to the form of government:  kingdom to empire (Hittites), fall of empire (Athens), republic to empire (Rome), kingdom to republic (France), or colony to republic (America).  But radical governmental change is not a given.  The same Grand Super Cycle decline that toppled the monarchy in the French Revolution left England’s monarchy intact.  England muddled through with a 60 year bear market and loss of the American colonies.  So there is a wide spectrum of possible outcomes for any given wave. 

 

In Part II we will examine previous X Wave advances and subsequent declines, as a matter of historical interest and also as a base of reference for the possible nature and time scale of events and developments that lie ahead for all of us, according to the long term Elliott analysis.

 

Part III will take a more pertinent look at specific causes of X Wave declines and consider factors and trends that would contribute to the imminent decline.

 

 

 

© COPYRIGHT 1999 - 2001 By JOSEPH M. MILLER, DAAN JOUBERT and MARION BUTLER

ALL RIGHTS RESERVED