|By Chuck Thompson | Excerpted from the January 2012 Socionomist
Originally published under the title, “How to Use Socionomics to Make Specific Social Forecasts”
[Ed: When is it appropriate to use socionomics to make a specific forecast, and what principles should you follow? Here socionomist Chuck Thompson uses the Socionomics Institute’s dramatic, anti-intuitive forecasts for the disunion of Europe – issued even as the union was being established – to demonstrate important socionomic principles. Here is an excerpt of the January 2012 article.]
Staying off the EU Bandwagon
The most helpful socionomic forecasts are the ones that no other method anticipates.
In 1989, when the Berlin Wall came down, German chancellor Helmut Kohl and French president François Mitterrand saw an opportunity for European integration. But calls for a united Europe had been stirring for decades, as worldwide positive social mood continued its inexorable push during the second half of the 20th century. A few weeks after the euro entered circulation on January 1, 2002, Rodrigo Rato, chairman of the European Union’s Council of Finance Ministers, proclaimed, “I don’t think Europe has ever enjoyed such good economic conditions.”2 Robert Mundell, who won the Nobel Prize for economics in 1999, said that in his judgment there was not a single country in the world that would lose from the advent of the euro.3 In addition, Mundell and C. Fred Bergsten, director of the Peterson Institute for International Economics, both argued that the euro would challenge the dollar for global supremacy.4 The following year, when leaders of 10 countries signed treaties to join the European Union, French president Jacques Chirac said, “A wonderful dream is coming true.”5 And when EU leaders signed their first constitutional treaty in 2004, the union’s president, Jan Peter Balkenende announced, “Today, Europe enters a new era.”6 Expressions of optimism and assured success revealed a consensus opinion held at the highest levels of intellect and political and economic authority.
Against this ebullient backdrop, Elliott Wave International’s analysts stood virtually alone in their assertion that the creation of the euro and the union “represented merely an optimistic extreme [accompanied] by decades of rising stock prices” and, as such, were doomed to fail.”7 EWI’s commentaries to this effect number in the dozens. …
Recently, the effects of the new trend toward negative social mood have become blatantly manifest. Sovereign debt crises have plagued Ireland, Portugal, Spain, Italy and Greece. Agencies have cut bond ratings across Europe. Economists doubt that the European Financial Stability Facility, one of three EU bailout funds, is large enough to “assure markets that Italy and Spain are protected,”17 and now, Europe’s central banks are considering what to do should countries leave the euro zone. …
People now take intra-European tensions as logical and given. But what about 10 to 14 years ago, when the union was established with nearly universal fanfare? Were today’s events predictable then? The answer is yes—provided you were basing your expectations on socionomics rather than then-current sentiment or events.
Looking Far Ahead With Socionomics
How did socionomics enable such a clear, specific forecast in the face of so much ebullience? Let’s take a look at some of the principles that came into play.
1. Social Mood is Unconscious, Powerful and Reflected throughout Society
As Prechter noted in the June 2010 issue of The Socionomist, social mood—which underlies social actions—is unconscious.19 To recognize how mood is affecting current events, you must train yourself to see it, step outside of it and judge it. This means staying unmoved by mood-impelled arguments posited by friends, politicians, analysts and the media. This takes practice and fortitude.
In the remainder of this five-page article, author Chuck Thompson provides four more socionomic principles behind our EU forecast, and reiterates Prechter’s classic list of 35 social polarities – such as “inclusion/exclusion” – that society tends to express during positive/negative mood extremes. You’ll come away from this article with a much clearer idea of exactly how to apply socionomics to your own assessment of current trends.
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Most economists, historians and sociologists
presume that events determine society’s mood. But socionomics hypothesizes
the opposite: that social mood regulates the character of social events. The
events of history—such as investment booms and busts, political events,
macroeconomic trends and even peace and war—are the products of a naturally
occurring pattern of social-mood fluctuation. Such events, therefore, are not
randomly distributed, as is commonly believed, but are in fact probabilistically
predictable. Socionomics also posits that the stock market is the best available
meter of a society’s aggregate mood, that news is irrelevant to social
mood, and that financial and economic decision-making are fundamentally different
in that financial decisions are motivated by the herding impulse while economic
choices are guided by supply and demand. For more information about socionomic
theory, see (1) the text, The
Wave Principle of Human Social Behavior © 1999, by Robert Prechter;
(2) the introductory documentary History's
Hidden Engine; (3) the video Toward
a New Science of Social Prediction, Prechter’s 2004 speech before
the London School of Economics in which he presents evidence to support his
socionomic hypothesis; and (4) the Socionomics Institute’s website, www.socionomics.net.
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