Psychoeconomics: globalization, markets, crisis

In essence, Karl Marx reaches a conclusion about the oscillating changes of economic values – from material to esthetic, psychological, depending on the cycle of economic development. Let us now turn our attention to the fact that we are speaking here of the rise of the psychological function of wealth in proportion to its growth. We are also speaking of the psychological peculiarities of people who are occupied with accumulation and so forth.

Values oscillate between the real and fictitious economy. The price of shares is more suited for the imagination of hysteroids, for the fantasy of auditory types. For kinesthetic types, or domain experts, the variation in the prices of gold, oil or raw materials is more familiar… With the change in the balance of psychotypes of the economically active population, or more precisely with the change in the fundamental metaprograms of these psychotypes, the monetary balance of these assets also changes. Naturally this change is not total, but occurs at the level of cumulative causes: one metaprogram has barely changed in one market participant, in another, in a third etc. And that’s how the market unfolds… We must bear in mind that in each person there are both a kinetic and audial beginning. Most commonly this is a transformation, a correction in the psychotype of specific individuals. The first one changes a little, then the second does, then the third… the accumulation of these changes constitutes another movement in the market… Naturally, indoctrination, mimesis, conformity and other processes are active here that regulate the transmission of information from one person to another, and regulate socio-psychological processes. These swings have become cyclical, while thanks to globalization they penetrate the economically active population, the economy of the majority of countries.

But where does the opinion of economists themselves come down on this topic? By analyzing the appended chart of cyclical interrelationship of the price of material and immaterial assets, they have reached the conclusion that between stock prices and the price of non-monetary assets there are 16 annual cycles. This is so whether we count from the minima or maxima. But is it accidental that in our case for each psychotype, two maximum peaks of solar radiation occur and that three times 16 exactly gives 48? This is the minimal value of the Kondratiev cycle, and the two psychotypes that provide intensive development are resonators and postresonators.

When analyzing Kondratiev cycles and their dependence on solar activity earlier, we concluded that for each psychotype of the economically active population two peaks of solar activity elapse. At one peak this psychotype comes to dominate the economy, and at the other occurs the preparation for his departure from making primary economic decisions. At a third peak, the next psychotype comes into dominance. And so forth. We should not forget that this applies to countries with endogenous developmental factors.

More time is needed for “warming up” resonators than for the emotional “jerking up” of the post-postresonators. Solar activity itself changes from century to century. Historical conditions of development change. The most important of these is the development of workforce productivity, the intensification of the social division of labor. Hence the variability of cycles is a regular psychoeconomic phenomenon.

When power belongs to the hysteroids, in countries that were centers of economic development, that is, those that developed under the influence of more endogenous factors than exogenous, social stratification grows, and an elite with hysteroid traces exploit the people in various ways. This may include raising prices of the consumer basket.

The US was already such a country in the nineteenth century. In previously enumerated accounts, 1868 was a base year for resonators coming to power in the US, for their most vigorous activity (1870 saw a peak in the number of Wolf sunspots, 139!). These were the first elections after then end of the Civil War. Twenty-four years pass for the years of resonator dominance. Starting in 1868, the price of the world consumer basket gradually fell, by almost 10%. The minimal value of the CPI occurred in 1878. Given the dominance of the resonators, the next peak of solar activity in 1883 was not so tightly bound to the rise of the cost of the consumer basket. Nevertheless the trend for a decline in the value of the CPI was disturbed. The resonators had already begun to lose their power, their influence on the society and economy.

The peak of solar activity that is connected with the ascension to power of the postresonators occurred in 1892-1895. In 1893, there were 85 Wolf sunspots. In the period of dominance of the postresonators, the price of the consumer basket swings slowly toward growth. In 1905, the price of the consumer basket again races ahead (a peak of solar activity), but then again falls. The years 1905-1907 were peaks of solar activity that removed the postresonators from the historical arena. But with the arrival of the time and culture of the post-postresonators, the price of the consumer basket grew vigorously. In their period, there occur the tempestuous Twenties of the twentieth century in the USA, the bulging of the financial market, and so on. That is, everything that led to the crisis of 1928-1939. 1917 brought increased solar activity (104 spots) to the benefit of the postpostresonators. But in 1928-1930, with a new cycle of solar activity (in 1928 there were 77 spots), “no” was said to a culture of psychoeconomic behavior of people with increased emotionality.

The cycles oscillate regularly with the change not only of centuries, but also of millennia. See the Wikipedia data on the cycles of solar activity over the course of millennia.

Cycles of solar activity lasted in the twentieth century a little more than 11 years, but cycles do occur that last from 9 to 14 years. The last cycle, which ended in 2008, lasted 12.5 years

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The form of the cycle is not consistent. In the opinion of the Swiss astronomer Max Waldmeier, the transition from a minimum to maximum of solar activity occurs faster when there is a greater maximum number of sunspots recorded in the cycle.

Economic development in the world, the cycles of economic changes, increasingly aligns with the cycles of solar activity. For the 210 years, as reflected in the charts presented, the consumer basket in the world attained 9 maximum peaks and 9 minimal CPI values. On average, the time from maximum to minimum was 23.5 years.

There were 19 cycles of solar radiation over this time, which is about 11-12 years between peaks of solar activity. To wit, for each turning point in the curve of the price of the consumer basket, there were two peak values of solar radiation.

The influence of solar activity on people’s decisions occurs through activation of the mechanism of opening and closing the circuits of conditioned reflexes. Conditioned reflexes, which are responsible for actions, will change more slowly than those that are responsible for making decisions, such as whether to buy more gold or valuable paper, shares of stock. Therefore, decisions about the overbought of one asset in relation to another are made more quickly, more vigorously, than about whether to install new technology and grow workforce productivity… Emerging social changes, such as war and so on, also affect the cycles. This likewise somewhat transforms the effect of solar activity on people’s economic behavior.

Differences in the decision-making of kinesthetic (and the psychotypes corresponding to them) and auditory types remain fundamental. The kinesthetic types more respect things that are weighty, substantial, that can be felt, touched, that you can buy… The auditory types more esteem that which can be beautifully described to others. They especially come to life when it is difficult to find criteria for cross-checking their narrative, when it is difficult to verify it.

This is generally found around the world. But after all, before the point at which globalization began, the cycles of change in the price of the consumer basket in many developed countries did not completely agree by any means. Only starting in the 1970s did these cycles begin to resonate with each other. There are many examples of temporary variations in the cyclicity of the same type of psychoeconomic changes both in the past and now. But on average a picture gradually emerges of agreement of all fundamental financial and economic decisions, that is, all psychoeconomic cycles.

The degree to which these decisions agree grows during periods of crisis, at the point when the post-postresonators are dominant. This is evident in a chart of the interval from the 20s to the 30s and the interval from the 1990s to the beginning of this century. Here the degree of agreement of change in the main indexes discussed is very high. The CPI only occurs in antiphase. And this is understandable. In a period of strengthening hysteroid personality traits, there is a sharp increase in the decision-making of external reference, that is, decisions begin to agree amongst themselves, automatically, without prodding or external enforcement, but according to the essence of its psychotype. Social motivators remain social motivators. Agreement of opinion for them is vitally important. There is even an excuse for poor decisions – everyone made a mistake… Such logic is a trait, but in the absence of the ability to think objectively and analyze, it is also the salvation of the social motivators.