Lessons from the four-generation cycle
“One generation passeth away, and another generation cometh: but the earth abideth for ever.”
Ecclesiates 1:4
The concept of a ‘generation’ is akin to a metronome that runs throughout history. Four generations, each one lasting 20–25 years, comprises one saeclum, roughly the length of a long human life. Understanding these cycles is important because each generation within the saeclum has its own identity and values, which in turn determines the next stage of evolution for the society in question. The sociologist Zvi Nameworth encapsulated this idea by writing how “value orientations do not change much during a generation’s lifetime. Committed during its early stages, a generation most often carried its value commitments into the grave.”
We can trace this four-part generation cycle through history, right from the earliest writings to today. The book of Exodus, written in the 13th century BC, is at its core comprised of four generations. The peers of Moses, newly awakened to the spirit of God, turned their backs on privilege, defied Pharaoh and led the Hebrews through Canaan to the Promised Land. The worshippers of the Golden Calf were too young to join Moses’s challenge against Pharaoh but were old enough to be men of no faith. After Exodus, the soldiers of Joshua came of age and were destined by Moses for leadership as they entered Canaan and enacted Moses’s dreams. Finally, the generation of Judges became the “inheritor youths” who were reminded by the dying Joshua that they enjoyed ‘land for which ye did not labour and cities which ye not built.’ This eighty-year life cycle spans four generations: when the Hebrews claimed victory over Jericho, Moses was an old man, the Golden Calf followers were in midlife, Joshua’s peers were young adults in the prime of life and the Judges were emerging as the children who will inherit all that had been claimed.
The four-part generational cycle appears in the classics too. In Homer’s The Iliad and Odyssey, there are four main archetypal generations: Nestor, Agamemnon, Odysseus and Telemachus. The Greek historian Polybius, in the second century BC, identified a four-part generational cycle when studying the rise and fall of empires; he noted how the cycle evolved from kingship, to aristocracy to democracy, to anarchy and then back to kingship. This quartile theme appears in Islamic political philosophy too as seen by Ibn Khaldun’s Muqadimmah, written in the 14th Century and continues into the modern age with French philologist Paul-Émile Littré adapting the four cycles to cover the “moral to industrial to scientific to aesthetic.” The Italian philosopher Giuseppe Ferrari, when assessing the failure of the 1848 uprisings across Europe, argued in his seminal piece “Teoria dei periodi politici” that generational changes were the single most important driver to social advancement since the Roman Empire. According to Ferrari, a new idea is launched by a revolutionary generation, the second generation is reactionary and fights off the new idea, the third generation builds bridges and political institutions to smooth over the idea and the final generation undermines the work of the third and the cycle then repeats. The four-part cycle is somewhat modified in the 20th century by the political philosopher Samuel Huntington who aligns the cycle to modern institutions. His Institutions vs Ideals model outlines how the first generation creates the institutions, the second improves them while realising their failings, the third raises new ideas while the fourth tests those ideals.
Drawing on history over three millennia, it is clear that the four-part cycle is one constant theme; one irreplaceable metronome. The appearance may differ, the timing may indeed vary, but the cycle remains. Much like the onset of autumn, one year it may arrive early sometime in September and another year it may arrive late in November, but it will come, and winter will follow. The exact timings may change but the sequence will remain the same.
With this context in mind, we are better placed to analyse what part of the cycle we find ourselves in today. The current world economic order, created at Bretton Woods, paved the way for the dollar to take front and centre stage in global commerce and reserves. Today, over 70% over the global economy and debt is denominated in dollars. 75 years on, we experienced the first generation between 1946–64 that solidified America’s role as a global superpower. The 1964–84 years saw a period of rebellious counter-culture that saw campus protests, urban riots and demonstrations against the Vietnam War. The Culture Wars from 1985–2007 promoted the idea of individualism while at the same time seeing increasing distrust of institutions and rising inequality. A generation is not a static concept; it is dynamic as it creates a vital trajectory between the hopes of youth and the experience of old age. The Spanish philosopher Ortgea y Gasset argues that it does not matter where a generation is but where it is going. The current generation born after 1984 has already experienced two devastating financial crises; one in 2007–09 and the second is unfolding as the current pandemic sends economic reverberations around the world. The experience for those born after 1995 is even starker; this generation is old enough to recall 2007–10, grew up in its aftermath and is now impacted first-hand as it enters the labour market. It is clear that the current financial infrastructure does not, to put it mildly, speak to the new generation that will lead humanity over the next 25 years. Their financial experience has differed to that of their parents who enjoyed modest savings rates, easy credit and a rising stock market.
The Covid-19 pandemic is a defining moment that will alter the role and distribution of money and credit. It marks a generational turn in our four-part cycle as the financial system undergoes restructuring in fundamental ways. Our perception of what is possible, desirable and achievable has been irrevocably changed. As in every transition, there will be beneficiaries and there will be losers; the key is to ensure the new paradigm, the new landscape, in whatever form it may take, addresses the fundamental economic issues of the day: inequality, wealth distribution and true financial inclusion.
These are the challenges facing our very own generational cycle.
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20 April 2020
Research of IBMR.io & ARCC
Editors: Eric Tao, Head of Media IBMR.io & Sinjin Jung, Managing Director IBMR.io.
