The title captures the gist of the Neo-Kondratieff Agenda: Can long waves break? This question looms large in EU countries. The Lisbon 2010 Mission depends on the breakability of the low, slow long trends considered stiff in many EU countries. The point is that some of these slow trends may change fast, indicating fast renewal.
Schumpeter attributed to Kondratieff the regular, slow moving Long Wave Concept (K-Model). Had Kondratieff not been imprisoned for his contrary economic theory, and shot upon order of Stalin, Kondratieff himself may have objected to his name being attached to such a stiff macro-wave mechanism in socio-economic life. He knew better. Kuznets (“Secular movements in production and prices”) started the Neo-Kondratieff Agenda with the notion of irregular movements (Kuznets: “atypical Kondratieff”). And I followed suit, in 1975, with the Metamorphosis (M-Model) as an alternative to Schumpeter's K-Model, proposing overlapping S-curves, implying the possibility that the economic system may shift fast from the stagnant branch of an old S-Curve towards the fast growing branch of the new S-Curve: A growth spurt. That is what goes on when a “long wave” breaks.
In this paper, I analyze Structural Instability (alias: breakability) by means of a potential function, apply it to the Roaring Twenties (and the crash 1929/31), and to the New Deal thereafter. The approach is robust and transferable to today: To the Roaring Nineties, the crash 1999-01 and a Neo-New Deal 2005 ff. this is “synthetic” Economic Evolution.
These contingencies vary from country to country (place dependencies), and depend on speed of better understanding, and learning (pace dependencies). Key impact area of this type of social learning is the financial service area. There will be much shake-out associated with the new take-off, as banks and governments prefer supporting big firms in old industries. The Neo-New Deal will favour European Small and Mid-Sized Firms' Innovations that open up new avenues.