Psychohistory - is it possible?
In the late 1950's Issac Asimov wrote a trilogy of books which has now become a classic. In the Foundation Trilogy, he invented the subject of psychohistory, in which the behaviour of large numbers of people can be predicted in a similar way to the random behaviour of large numbers of molecules leading to the predictable macroscopic effects of thermodynamics. Whereas normal history concerns itself with important events, and the actions of leaders, psychohistory works in the background, dealing with impersonal forces which cannot be deflected by individual actions.
But is such a thing possible? I don't want to claim too much, but I have noticed certain parallels between events in the real world concerning the 'Junk Bond King' Michael Milken and those of a character in Asimov's books. See what you think.
|Using his newly developed science of psychohistory, Hari Seldon predicts the decline and fall of the galactic empire. He also sees that he can use his knowledge to reduce the misery which will ensue. He sets up the an organisation - the Foundation - in such a way that it will survive the collapse and form the core of a second empire. In the first book of the trilogy Seldon's plan gives the Foundation protection from, and eventually leadership of, the nearby kingdoms which arise as the empire starts to collapse. In the background, forces come into play which often lead to results in direct contradiction of the beliefs at the time. The citizens of the Foundation gain confidence in the almost magical Seldon plan. At the start of the second book, the they are facing the remnants of the Empire itself - technologically inferior, but still militarily stronger than the Foundation. One successful campaign could put the Empire back in charge it seems.||Economic cycles of various lengths are proposed by economists Optimism about the economy leads to investment and growth, until saturation means that no more growth is possible, and pessimism and decline sets in. This is a driver for the shorter cycles. For the longer ones, in particular the 50-60 year long Kondratieff cycle, there are different drivers. Technological development feeds upon itself for a while, giving new products and economic growth. Over time, businesses build up a range of profitable products, and so innovation becomes less attractive, eventually leading to decline. Another factor is that following a depression, workers are happy to get a reasonably paid job. Good profitability means high investment and economic growth. Over time however, the workers begin to compare the large profits being made with their own modest income. Resentment builds up, there is industrial unrest, and the economy goes into decline.|
|The Foundation have a serious problem in the shape of the Bel Riose, a highly skilled general of the Empire. What is worse, his strategy of Inclosure seems to have no possible counter-measure. None of the Foundation's responses do any good, in fact they just seem to make things worse. Maybe the Empire's problems are now a thing of the past.||It seems that economic cycles may be a thing of the past. Milken has developed a way of financing companies which is much more flexible than those used in the past. The new high-yield (which some people call junk) bonds, combined with Milken's skill at seeing the value of a company, means that those who believe that a business is facing decline don't have to put up with it - they can buy it out and improve it.|
|Riose is arrested as a traitor. He has been loyal to the emperor, and seemed the best hope for the continuation of Imperial power. However, there are some who prefer the internal power struggles for the Emperor's throne, and Riose must be prevented from becoming a focal point for this.||As part of a large investigation, Milken is questioned and later charged with trading offences. Although Milken's supposed offences seem trivial compared to the insider dealing which others have been guilty of, it is decided that he should be treated as the ringleader and so he is sentenced to a long jail term.|
|Soon after the arrest there is rebellion in the province of Siwenna, a significant loss to the Empire. The decline of the empire continues, as Seldon said it must||Soon after the investigation of Milken starts there is a collapse in stock prices. This is followed by a "readjustment" in many areas of the economy.|
Probably many people will see this as over-favourable towards Milken (although Riose is actually part of the "evil" Empire). Indeed, it is mostly based on Jesse Kornbluth's "Highly Confident: The Crime and Punishment of Michael Milken", which was supported by Milken (some people have gone so far as to claim he financed it). My response to this is to question why anyone thinks it's so wrong for Milken to be able to put forward his version of the story. Indeed, whatever you may think of what actually happened, the use of "emergency" powers against Milken, meant for totally different circumstances, certainly suggests that he didn't get a fair trial.
So could psychohistory be real?
Well, I wouldn't want you to take this comparison too seriously. You'll see that I haven't really looked at the details of the 1980's boom and crash, nor how this ties in with supposed long-wave economic cycles. The point I'm making is that maybe there is a "dead hand" acting in the social and economic world, and perhaps one day a "Hari Seldon" will come along and figure out how it works.