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The influence of sun activity on economic processes

The influence of sun activity on economic processes

Today economists study many different potential causes for fluctuations in aggregate economic activity, which provokes economic recessions and crises. The primary theories focus either on aggregate demand concerns such as overinvestment or under consumption or on aggregate supply concerns such as technological change or a shift in the resources available to a nation. The idea that changes in sun activity might influence the economy, even if it bears no relation to fundamentals, is controversial but has been widespread in many areas of economics.

In my presentation, I will show you some very interesting correlations between the various phases of the 11 year solar energy cycle (usually called "the sunspot cycle") and the corresponding changes that impact our collective behavior and as a result, historical events and economics. I am going to answer the question: Can solar energy influence the economy.

In the 19th century, some economists researched whether sunspots might have a real effect on weather and agriculture and thus on prices. In other words, they proposed that sunspots might be fundamental influences driving the economy.

The founder of this theory is considered to be an English economist William Stanley Jevons (1835-1882), who has connected a business cycle with 11-years cycle of solar activity. He suggested that from "the Sun, which is truly 'of this great world both eye and soul', we derive our strength and our weakness, our success and our failure, our elation in commercial mania, and our despondency and ruin in commercial collapse".

Jevons was the first to investigate the striking similarity between the length of many historical business cycles and the length of the average length of the sunspot cycle (which is approximately eleven years).

Jevons finds that the prices of most agricultural products vary dramatically over an eleven year cycle. The prices of wheat, barley, beans, peas, and rye reach a relative minimum in the second year of the cycle, an absolute maximum in the fourth year of the cycle and an absolute minimum in the tenth year of the cycle before recovering in the final year of the cycle and the first year of the new cycle. There does appear to be a rather obvious and consistent trend in prices over these eleven year periods. The situation repeated for quiet a century.

Another piece of empirical evidence which Jevons developed is that “…there is more or less evidence that trade reached a maximum of activity in or about the years 1701, 1711, 1721, 1732, 1742, 1753, 1763, 1772, 1783, 1793, 1805, 1815, 1825, 1837, 1847, 1857, 1866. These years marked by the bursting of a commercial panic, are as nearly corresponding years, and the intervals, vary only form nine to twelve years. The average length of the period is about 10.3 years.” (which is the average length of the sunspot cycle)What is also particular is the years when trade reached its maximum level were the years when solar cycle was also in its maximum.

Jevons also believed that if it was possible to accurately predict the sunspot cycle and the corresponding rich and poor harvests then it would also be possible to predict coming economic recession.

Another scientist Alexander L Chizhevsky, a Russian professor noticed during World War I that particularly severe battles followed solar flares. To test his hypothesis that sunspot cycle influenced human activity, he analyzed sunspot records as well as battles, revolutions, riots and wars in Russia and 71 other countries for the period 500 BC to 1922 CE. He found that 80% of the most significant events occurred during the 5 years of maximum sunspot activity.

Chizhevsky divided the eleven year sunspot cycle into four social periods:
Period 1: (approximately 3 years, minimum sunspot activity). Peace, lack of unity among the masses, election of conservatives, autocratic, minority rule.
Period 2: (approx. 2 years, increasing sunspot activity). Increasing mass excitability, new leaders rise, new ideas and challenges to the elite.
Period 3: (Approximately 3 years, maximum sunspot activity). Maximum excitability, election of liberals or radicals, mass demonstrations, riots, revolutions, wars and resolution of most pressing demands.
Period 4: (Approximately 3 years, decreasing sunspot activity). Decrease in excitability, masses become apathetic, seek peace.

Here is the division of the 10 years sunspot cycle of 1962-1972 according to Chigevsky method.
Peace/Repression Period 1962-64
Cuban Missile Crisis, Nuclear Test Ban Treaty, active civil rights period
Increase Period 1965-66
500,000 troops sent to Vietnam, first big anti-war marches, first US inner city
riots, China cultural revolution begins
Maximum Period 1967-69
Height of Vietnam War, peace demonstrations, worldwide student uprisings,
Chinese cultural revolution continues, Czechoslovakian uprising/USSR invasion, US
inner city riots, Israeli Arab war, Woodstock and height of hippy movement
Decrease Period 1970-72
Women's movement takes off as student movement slacks off,
Vietnam War winds down/Paris Peace talks, Bangladesh independence, Communist Allende elected in Chile
That is just a small sampling of the many riots, rebellions, revolutions and wars which have accompanied sunspot cycles. Chigevsky learnt that the major and the most important economic events of the 20th century took part during the maximum of sunspot activity.

1905-08 German miners, Hottentots, Turks, Indians, Honduras, Russians revolt
1916-18 World War I, Irish and Indian revolts, Russian Revolution
1927-31 Mussolini and Hitler build power on economic unrest; revolts in Vienna, China; formation of Red Army; Spanish Republic formed; mass civil disobedience in
India,Great depression in US
1937-40 US steel strike, Spanish Civil War, Germany and Japan start World War II,
mass civil disobedience in India
1947-51 Greek Civil War, First Israeli-Arab War, Indian-Pakistani riots, Red Army
conquers China, Vietnam revolts, Korean War
1957-60 Israel invades Sinai, Hungarian uprising, Cuban revolution, civil rights
movement in US, French-Algerian war, MauMau revolt, Iraq revolt,
numerous African nations gain independence
The 11 year sunspot cycle has some close correlations to the stock market, economic growth and recession. Fluctuations in solar energy correspond to fluctuations in levels of human excitability, which in turn influences the business cycle.

As it can be clearly seen on the graph each sunspot cycle corresponded with an economic recession.
Sunspot peak and recession....1957-1958 (also 1960)
Peak and recession............1969-1970
Peak and recession............1980 (also 1981-1982)
Peak and recession............1990-91
Sunspot peak and recession in 1999-2000
Every recession which took place during the second part of the 20th century was during the maximum of sunspot activity.

It should be also noted that periods of low solar activity are characterized by relative calm, stability, and economic growth. (for example1976-1979, 1984-1989, or 1995)

Moreover economic crises and collapses usually occur just before the sunspot reaches its maximum. As we can see from this chart, there was a crash in world stock markets in 1987 which took place in the beginning of a new cycle. The recession lasted till 1991 when a cycle has reached its maximum point. Then the recovery of economics began.
The same situation was in 1998, when the crisis slowed down the growth of economy for the following 1999 year, whish was the beginning of maximum solar activity.

A sunspot cycle has four stages:
1) The beginning of a new solar cycle. This period is characterized by expansion of economics (increase in production and prices, low interests rates)
2) Crisis (stock exchanges crash and multiple bankruptcies of firms occur);
3) The maximum point of sunspot cycle during which there is a recession (drops in prices and in output, high interests rates);
4) The declining of a cycle- recovery (stocks recover because of the fall in prices and incomes).

This model is quiet similar to that of French economist Clement Juglar, who was among the first to identify the presence of economic cycles 8 to 11 years long, which by the way corresponds to the average length of sunspot cycle.

Let’s take into consideration the crisis which takes place nowadays. The crisis began in 2008, when it was the beginning of a new solar cycle. It was the period when people behaved more risky; the economists mispriced the risks, taking thoughtless and unfounded actions. For example by allowing people to receive credits without making a proper estimation of their creditability. This has led to the beginning of the crisis.
Having analyzed Chijevsky's pattern and my interpretation of current events I can give my own answer to the question how long will the recession last. It is not so reassuring. I believe that it won’t finish until 2011, which would me the maximum point of a current sunspot cycle. Since 2011 there would be a declining of a solar cycle and thus the recovery of economy.

In the conclusion of my presentation I can say that I believe that solar cycles and the magnetic activity can affect brain waves, and peoples’ decisions and behavior.
Thus Sun’s activity has some effect on economic outcomes and while it is not the only variable which should be considered when formulating economic policy it is worth considering when making a decision what economic strategy to use.

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