By Alan Hall
Originally published in the February 2012 Socionomist
History shows that negative social-mood trends, as indicated by bear markets in stocks, unfold in down-up-down Elliott wave patterns. But within such patterns, the first and second downtrends tend to produce qualitatively different types of social actions.
In large-degree bear markets, the second declines tend to produce major wars. That is not the case with first declines, when major wars are typically absent.
Elliott Wave International believes the stock market is currently in the first decline of a larger-degree negative pattern. If EWI's outlook is correct, then, World War III is unlikely to commence until after the second decline begins, decades in the future.
Yet even first declines bring plenty of risks. The current Supercycle decline that began in 2000 has already hosted the 9/11 attacks, the wars in Afghanistan and Iraq, and multiple revolutions and protests. It is likely to spark more social conflict, but not global war.
Socionomics per se cannot predict the specifics, but if you understand what to look for, you can spot the risks.
This report sketches potential risks facing us during the rest of the first decline, which is wave (a) under the Elliott wave model.
Why Big Initial Declines Tend NOT to Produce Major Wars
As you can see from Figure 1, none of these first waves produced major wars. In Chapter 16 of The Wave Principle of Human Social Behavior (1999), Robert Prechter hypothesized why this is the case:
Apparently society handles the first retrenchment in social mood, no matter how severe. "A" waves surprise optimistic people, who are unprepared and unwilling to wage war. It is the second drop that makes a sufficient number of increasingly stressed people angry enough to attack others militarily.1
The largest-degree bear markets of the past several hundred years all began with intense deflation. The three largest deflation episodes in the past three centuries were in 1720-1723, 1835-1842 and 1930-1932--all of these occurring during first waves in large-degree negative social mood trends. Figure 4 in the September 2008 Global Market Perspective Special Report (click here to download the report) includes an index that shows periods of strong inflation and deflation.
We might hypothesize that during the first downtrend people are too busy adapting to the stunning financial setback to organize all-out war.
Deflation and Depression Influenced the Hoover Administration's Decisions to Cut Back the Military
As concern for matters at home begins to dominate, people care less for expensive military excursions overseas. The Great Depression provides a textbook example. Consider these headlines from 1930-1933:
Hoover Speeds Delegates to Navy Conference Today; Hopes for Real Reduction; Cuts Put Before Politics
--The New York Times, January 7, 1930
All Forces are Included; Armies, Navies, Planes Would Be Reduced to Defense Needs ... . Tanks, Chemical Warfare, All Large Guns and Bombers Would Be Abolished. OUR SAVING $2,000,000,000
--The New York Times, June 22, 1932
Foes to Hoover's Arms Cut Offer Become Friendly ... Many Leaders Predict Success of Proposals
... . a real reduction capable of affecting economic relief ... . Eight European land powers, probably France, Germany, Italy, Russia, Poland, Rumania, Jugoslavia and Czechoslovakia will begin talks ....
-- The Deseret News, July 12, 1932
Deflationary psychology is a collective mindset that produces contractions in credit and declines in money flow. It also leads to reduced prices of investments and, eventually, other goods and services. Since 2007, we've already seen many of its classic symptoms: creditors unwilling to lend, consumers unwilling to borrow, anger against banks, calls to balance the federal budget, mass layoffs, homebuyers holding out for lower prices, a spike in the personal savings rate and the Federal Reserve aggressively lowering interest rates--its price for renting money. Much as "irrational exuberance" characterized the extreme of the preceding bull market, deflationary psychology now has begun bearing society toward the opposite extreme, "irrational frugality."
It is still early in the decline. But see if you hear echoes of the 1930s' attitude toward the military in these articles:
Radical overhaul of military retirement eyed ... . everything is a potential target for budget cutters.
-- CBS News, August 15, 2011
Golden decade is ending for defense industry, and stocks ... . The federal government is deeply in debt ... . defense spending is poised to retreat, and so are industry profits.
--AP, August 19, 2011
Libya's lessons for NATO - and US defense cuts ... . Many of NATO's 26 European allies sat out the five-month fight, either because they were unwilling to directly participate (notably Germany) or their recent defense cuts made them incapable of joining in (most of them).
-- The Christian Science Monitor, August 24, 2011
Pentagon Seeks Biggest Military Cuts... . [The U.S.] Defense Secretary [said] the nation's "extreme fiscal duress" now required him to call for cuts in the size of the Army and Marine Corps... .
-- The New York Times, January 6, 2012
The U.S. and the U.K. have the world's largest and third-largest defense industries, and both say they plan to cut military spending in coming years. "Legislation passed by Congress before its summer recess will trim the defense budget by $350 billion over the next ten years. In addition, up to $500 billion more in security cuts will kick in," according to The Warner Robins Patriot. Even promised spending is being questioned now. According to CBS News, "A Pentagon-sponsored study says military pensions are no longer untouchable--they're unaffordable."2
The U.K. Independent reported on February 17, "Not just in the US and the UK but in the wider industrial world, pretty much everyone is cutting or flatlining on defence."3 If you have any doubt as to the breadth of the developing spending retrenchment, check out this quote from the January 29, 2012, Washington Post:
NATO allies are confronting a sustained weakening of the military alliance as ailing economies are forcing nearly all members, including the United States, to accelerate cuts to their defense budgets at the same time. ... [Members] of the alliance ... can no longer afford their security commitments ... a long period of austerity is in the offing.4
It's true that it is common for the U.S. government to project military cuts that never materialize. Having said that, Hoover's defense-cut plan grew widely popular near the 1932 low, when America was a net creditor and solvent. Now it is neither. If history is a guide, by the time of the wave (a) low, America--and the world--will demand defense cuts as they never have before.
The Current Mindset is Less Tolerant of Adventurism
In 2011, the Brookings Institution's Peter W. Singer surveyed over 1,100 U.S. National Student Leader Conference attendees between the ages of 16 and 24 and found "a strong emerging narrative of isolationism... ." The broader public is beginning to hold similar feelings, Singer notes: "[The] American public and its policy leaders seem to be steering away from any [military] mission of scale."5
Two recent national surveys agree. According to the polls, most Americans now think that the war in Afghanistan has not been worth the costs and that the U.S. should not be there.6
Until recently, waning enthusiasm for foreign entanglements was also evident in the staying power and rise in popularity of Republican presidential candidate Ron Paul.7 Paul was cheered in a recent debate when he said, "This country doesn't need another war. We need to quit the ones we're in; we need to save the money and bring our troops home."8
The increasing eagerness to end foreign entanglements extends beyond the civilian population. Members of the military are beginning to question the worth of their overseas missions. U.S. Army Lieutenant Colonel Daniel L. Davis recently published an article in Armed Forces Journal, "Truth, Lies And Afghanistan: How military leaders have let us down." Davis described his 2011 observations in many areas of Afghanistan: "What I saw bore no resemblance to rosy official statements by U.S. military leaders about conditions on the ground. ... Instead, I witnessed the absence of success on virtually every level."9
Similar rank-breaking has emerged in Russia, where veterans of Russia's elite paratrooper force have recorded "the most popular protest song in Moscow today."10 The simple anthem has become the centerpiece of a growing anti-Putin protest movement. This happened as the Financial Times headlined, "Kremlin plans to restore the army's flagging power are meeting resistance at home."11
But perhaps the ultimate symbol of intra-military rebellion today is Bradley Manning, the U.S. Army private accused of leaking classified U.S. information to WikiLeaks in 2010. Manning was recently nominated for a Nobel Peace Prize.12
Finally, here's a telling social expression: According to Ron Paul's campaign, the candidate has "raised more campaign donations from active-duty members of the military than all other presidential candidates combined--Republican or Democrat."13
These items are further evidence of rising skepticism about the value of military action, which is consistent with wave (a) psychology. Having said that, if negative social mood does not resume soon, expect to see a temporary renewal of interest in foreign military actions.
Expect Intra-National Conflict in Wave (a)
The wave-A urge to cut military spending is not driven solely by a desire for peace, however. In fact, it is accompanied by a rising desire for conflict. This should result in a larger number of smaller conflicts.
The current decline fits this pattern. The wars in Afghanistan and Iraq, while protracted and full of their own tragedies, nonetheless have been minor relative to the wars typical of second declines (again, see Figure 1).
A-waves tend to produce more-internal conflicts, as well. That is indeed the trend we observe today. In 2011 alone, revolutions erupted in Tunisia, Egypt, Libya and Syria. Large riots or protests began in a dozen other Arab countries, as well as in Chile, China, Greece, Israel, Italy, the Philippines, Portugal, Spain, Sweden, the U.K. and the U.S., to name a few.
Governments are responding. The Atlantic reported, "[Police] forces throughout [America] have purchased military equipment, adopted training, and sought to inculcate a 'soldier's mentality' among their ranks."14 The negative mood trend has created what one criminal justice professor has called the "militarization of Mayberry" (see photo).15
The 2011 annual report of the Sydney-based Institute for Economics and Peace quantifies the mix of violence and tranquility worldwide. It says:
The world is less peaceful for the third straight year ... . The fall in peacefulness in this year's Index is strongly tied to conflict between citizens and their governments rather than conflicts with other nations ... . While the overall level of peacefulness was down, this year's data did show increased peacefulness in some areas - most notably levels of military expenditure as a percent of GDP and relations between neighboring states.16
The Risks We Face in Wave (a)
As animosity rises and military budgets fall, expect even more belligerence-on-the-cheap. Verbal threats, espionage, trade wars, financial conflicts, internal terrorism, cyber attacks, authoritarian clashes, border conflicts, drone attacks and anti-satellite attacks should all increase.
Following are some of the major dangers and types of actions we will face as we wend our way through wave (a).
1. Living in a Material World
The world today brims with historically high stockpiles of conventional weapons.17 When a nation becomes destabilized, individuals and groups within the country may access the weapons. For example, one military expert said Libya's arms imports "reached farcical levels in the late 1970s and 1980s."18 The 2011 Libyan Revolution "liberated" many of those weapons. Libyan rebels and others looted some 12,000 land mines and an estimated 20,000 hand-held, heat-seeking surface-to-air missiles capable of shooting down commercial jet liners.19 Peter Bouckaert, emergencies director at Human Rights Watch, said, "weapon proliferation out of Libya is potentially one of the largest we have ever documented ... . a thousand times the explosives that the insurgents in Iraq had."20
In addition, CNN reported that Libya still has about 10 tons of deadly mustard gas.21 To put all this in perspective, consider that Libya doesn't even make the list of the top 15 arms importers. Nor is Libya unique in its status as an unstable state with an impulse to collect weapons. In late February, U.S. State Department officials warned about Syria's weapons caches: "It's an exponentially more dangerous program than Libya. We are talking about legitimate WMDs here--this isn't Iraq."22
2. Soldiers of Fortune
The world now has hundreds of thousands23 of trained mercenaries--called "private contractors" by the Pentagon--who continue to seek employment. In its 2011 report to Congress, the Commission on Wartime Contracting wrote, "U.S. agencies engaged contractors at unprecedented levels to help achieve mission objectives in Iraq and Afghanistan.... The number of contractors and the scope of their work overwhelmed the government's capacity to manage them effectively."24
Much has been written about the various nuclear threats in the world today, including so-called "suitcase" and "dirty bombs" and their ease of transport. In addition, a handful of states have active nuclear weapons programs and are not signatories of the nuclear non-proliferation Treaty of 1970. India, Pakistan, North Korea and Israel all famously have the bomb, although details about their programs are secret.
Many other countries now hold dangerous nuclear material to produce electricity. Those programs operate under international oversight, but concerns persist about the material's security.
Finally, even after decades of programs to reduce their number, the world today contains an estimated 19,000 warheads, about 5,000 of them active. That number is especially sobering when you consider the damage one of these "official" warheads would wreak--much less the retaliations that would surely follow.
The commander of the newly formed U.S. Cyber Command warned in September 2011,
Threats posed by cyber-attacks on computer networks and the Internet are escalating from large-scale theft of data and strikes designed to disrupt computer operations to more lethal attacks that destroy entire systems and physical equipment.25
Atlantic magazine recently reviewed several articles by Chinese analysts in Peoples Tribune Magazine to sum up China's expectations about cyberwar with the United States:
The picture is not pretty. All [the analysts] see cyberspace as an emerging, critical area of competition and are notably pessimistic about the future. Conflict seems almost inevitable ... . Chinese analysts believe the United States is ahead in the competition.26
The Peoples Tribune headline declares "The New Cyberwar Disaster." The lead article says, "Chinese Internet Security officials stressed that China has become the biggest victim of cyber-attacks." The U.S. online-security firm McAfee claimed the opposite on August 3, however, when it pointed the "finger of blame ... firmly in the direction of China"27 for Operation Shady RAT,28 "The world's most extensive case of cyber-espionage ... . a massive loss of information that poses a huge economic threat."29
Such opposing viewpoints tend to be reconciled when social mood is trending positively, but often come to blows in a negative trend.
As The Economist ruminated recently, while responsible governments realize that extensive cyberwar would produce unpredictable blowback, smaller groups may exercise less caution:
[An] attacker cannot be sure what effect an assault will have on another country, making their deployment highly risky. That is a drawback for sophisticated military machines, but not necessarily for terrorists or the armies of rogue states.30
Non-government capabilities are evolving rapidly.31 The hacker group Anonymous recently shut down the websites of the F.B.I., U.S. Department of Justice, U.S. Copyright Office, Warner Music and several other major media publishers, and later hacked the private intelligence firm Stratfor and copied 5.5 million of its emails. Now the group says it is teaming up with WikiLeaks, which "has partnered with 25 media organizations to sift, analyze and publish" Stratfor's emails.32 Such information theft is but a nuisance compared to the Stuxnet computer virus (discussed in our November 2010 issue), which targets physical infrastructure and is now available to individuals. CBS News reported on March 1, "You can download the actual source code of Stuxnet now and you can repackage it...point it back to wherever it came from."33
As governments struggle to neutralize such threats, they will seek to control and shut down larger and larger swaths of the Internet. This will fuel the growing global authoritarian/anti-authoritarian conflict.
Indeed, on February 22, Forbes magazine warned, "We lose freedom incrementally, even subtly, at times. Certainly this has been the case with the War on Terror. Brace yourselves for the War on Cyberterror."34
Training just one F-15 fighter pilot requires about 5000 hours and $10 million, yet an operator can learn to fly a medium-sized Hunter unmanned aerial vehicle (UAV) in 120 hours, and a smaller drone such as the Raven UAV in 60 minutes.35
Advances in military technology36 increasingly reduce the costs of monitoring and controlling people.37
No country has a monopoly on such systems. In February 2010, Peter W. Singer wrote in Newsweek:
At least 40 other countries--from Belarus and Georgia to India, Pakistan, and Russia--have begun to build, buy, and deploy unmanned aerial vehicles, or UAVs ... . All told, two thirds of worldwide investment in unmanned planes in 2010 will be spent by countries other than the United States.38
Nor are governments the only ones who can procure drones. Libyan rebels, for example, last August bought a $120,000 micro-drone from a Canadian manufacturer and used it to observe Gaddafi's military activity.39
In the January 21 New York Times, Singer observed that the U.S. Central Intelligence Agency (CIA), which is composed of civilian political appointees, now runs the U.S. drone campaigns with no Congressional authorization. He wrote, "We don't have a draft anymore... . We do not declare war anymore... . We don't buy war bonds or pay war taxes anymore... . And now we possess a technology that removes the last political barriers to war."40 With no actual political debate, he notes, the U.S. government's drone campaign has "set an enormous precedent, blurring the civilian and military roles in war and circumventing the Constitution's mandate for authorizing it."
Looking further into the future, in a November 2011 Harper's essay, Daniel Swift quoted physicist Freeman Dyson on pilotless planes: "Natural evolution will make them smaller and smaller, cleverer and cleverer, he says. They could be as small as hummingbirds ... and then everybody would have them. Then they won't be ours."41 Nor are micro-drones likely to be limited to surveillance use, as they are already being weaponized.42
Drones have scary potential,43 but three years of smaller-degree positive social mood trend have eased society's fear. Law enforcement, scientists, real estate agents and private individuals already use the relatively inexpensive devices.44 On February 6, the Senate sent to President Obama legislation that would require the Federal Aviation Administration to provide airspace for remote-controlled flying drones.45
But when social mood shifts into another strongly negative phase, we expect Congress will rescind any such legislation and impose strict controls on unmanned, remote-controlled aircraft. Drones will become another flashpoint in the authoritarian/anti-authoritarian battle.
Making a biological weapon is easy: "A person at a graduate-school level has all the tools and technologies to implement a sophisticated program to create a bioweapon,"46 warned a former director at the Pentagon's Defense Advanced Research Projects Agency recently. A January 2010 report commissioned by Congress gave the U.S. government a grade of "F" in bioterror defense:
The United States is woefully behind in its capability to rapidly produce vaccines and therapeutics, essential steps for adequately responding to a biological threat ... . [The] lack of U.S. capability to rapidly recognize, respond and recover from a biological attack is the most significant failure identified in this report card.47
The National Biodefense Science Board issued its own report in March 2010: "Where are the Countermeasures?" It described a "lack of urgency in national effort ... lack of coherence in how to organize federal assets ... lack of prioritization of threats ... lack of synchronization and integration of effort ... failure to fully engage biotechnological and pharmaceutical industry and ... inadequate resources."48 In October 2011, Wyl S. Hylton wrote in The New York Times: "As one senior official in the Obama administration put it: 'We need a new model. This is never going to work.'"44
As with other items in this list, the bio-threat can emerge at any level in society. Thus the friendly old guy whose neighbor said he "drove a church bus [and] enjoyed giving presents to neighborhood children on Christmas"49 can be a bioterrorist in his spare time. In October 2011, the FBI arrested four elderly men in Northeast Georgia and charged them with plotting explosive and bioterror attacks.50 At least one of the men was a member of the "Georgia Militia," a right-wing anti-government group.51 The local good old boys fell for an eight-month undercover sting. But others are not caught so easily. For example, it took the FBI more than eight years to close their case on the 2001 anthrax attacks, which was "one of the most vexing and costly investigations in U.S. history," according to Fox News.52
Biodefense is a formidable task. In his October report, The New York Times' Hylton interviewed over 100 federal bioterror officials and concluded, "At times it seemed that the most virulent pathogen in biodefense was mutual hostility, and everybody had it."44 Negative social mood makes a tough job tougher.
Bottom line: The social mood trend increases the likelihood of bioterrorism, increases society's susceptibility to disease and degrades the trust, cooperation and funding necessary to prevent or respond to attacks.53
7. Radically Empowered Individuals
In April 2000, Bill Joy, co-founder of Sun Microsystems, warned that technology would give rise to radically empowered individuals wielding "knowledge-enabled mass destruction" (KMD) capabilities:
The 21st-century technologies - genetics, nanotechnology, and robotics (GNR) - are so powerful that they can spawn whole new classes of accidents and abuses. Most dangerously, for the first time, these accidents and abuses are widely within the reach of individuals or small groups. They will not require large facilities or rare raw materials. Knowledge alone will enable the use of them.54
Society is swiftly embracing GNR technologies and their associated risks. In our December 2011 issue, we quoted a Washington Post report about risks inherent in genetic technology,
Imagine ... new organisms that wipe out entire populations and bio-toxins that target world leaders. ... [It] is possible to create all of these today, using the latest advances in synthetic biology.55
High-tech manufacturing is increasingly possible in a small workshop.56 Much robotics technology is now available as modular, open-source components. Individuals can make their own tools and potentially, weapons. The trend already has a name: "lone wolf" terrorism. "Since 2009, according to one senior US terrorism official ... all terrorist plots in the West have been the work of lone individuals... ."57 A recent amateurish attempt by a 26-year-old to fly explosive-packed, remote-control model aircraft into the Pentagon and U.S. Capitol bodes more sophisticated lone wolf actions to come.58
Use Socionomics in Your Decision-Making
If wave (a) unfolds as EWI expects, it should produce smaller, cheaper, less-coordinated conflicts. One or more events may be at least as surprising and tragic as the 9/11 terror attacks.
We believe the socionomic perspective--using stock markets as the primary indicator of future social behavior--can help you to anticipate times of increasing hostility and perhaps stay out of their way.
- The Global Peace Index, which ranks 153 countries for peacefulness, may help you to assess your relative vulnerability.59
- See also SIPRI's map of the top 20 arms importing countries from 2006-2010.60
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This article is syndicated by The Socionomist, a publication of the Socionomics Institute, and was originally published under the headline How Will the New Social Psychology Affect Military Action?. The Socionomist is designed to help readers understand and anticipate waves of social mood. Copyright © 2012 Socionomics Institute.