The U.S. reduced its profile at the DAVOS, Switzerland, economic summit this year as it had become a target for criticism for underwriting the global depression. We always knew that a global recession would follow a global economic boom, but I must admit I was as surprised as anyone that the global recession began in the U.S.

I was of the mindset that China would overheat its economy and not know how to deal with a meltdown and lo and behold, it was Wall Street’s creative mortgage security speculation that punctured the bubble.

U.S. financial ineptitude allowed China to attend DAVOS looking like an economic genius, dumping on the U.S. The U.S. has to take the criticism much as any borrower dependent on a banker has to sit still and accept the recriminations of the lender.

Nations like China and Russia can now go back home and blame whatever economic problems that they have on the U.S. to their own citizens. “It was all the Americans’ fault.”

Americans have to grin and bear it or finance U.S. debt without foreign capital inflows, which cannot be done at a reasonable interest rate.

Wall Street, typically well represented at DAVOS, was denigrated by this year’s participants. Prime Minister Putin noted that Wall Street investment banks have virtually ceased to exist and that the world currency was too dependent on the U.S. dollar.

Ironically, the dollar looks like gold compared to the Russian Ruble and China’s currency is whatever it wants it to be worth.

Prior to the Great Depression of the 1930s, Joseph Stalin commissioned an economist named Nikolai Kondratieff, to help shape the first Soviet five-year plan. Kondratieff’s opposition to Stalin’s collectivization resulted in his falling into disfavor and into the Russian gulag where he perished.

Stalin believed that the Great Depression proved the superiority of the communist central-controlled state over capitalism. You could hear a few similar assumptions being expressed this year at DAVOS. Kondratieff’s published work concluded differently.

He forecast that capitalism was dynamic and that economic excesses would be purged and losses absorbed and capitalism would result in a rebirth of economic growth that would far exceed the capability of the communist central managed economy.

Kondratieff’s work on the long term economic cycle became popularized as the K-wave economic cycle.

Capitalism was viewed by some at DAVOS as a failure that must be modified or even replaced. That means some in DAVOs were as foolish in their observation of capitalism today as Stalin was in the 1930’s.

Neither leaders in Moscow or Beijing doubt the K-wave works after both societies became forced to accept capitalistic market-based economies in order to sustain state power. Economic freedom will progress toward political freedom and they know that, too. Such cycles progress in 50-60 year increments of change, likely lengthening with life expectancy.

Not unlike the capital purge of the 1930s, today’s de-leveraging will cleanse the economic system of excess and build the foundation that another era of economic expansion and growth that can be built upon. Risks from protectionism must be avoided to recover from the K-wave trough.

Essentially, both the Chinese and Russians blame the U.S. for the collapse in consumer demand leaving them without a market for what they sell. China needs 8-9 percent annual economic growth to sustain the transition from an agrarian to an industrial economy.

China tells the world what it wants it to know so that economic data provided by Beijing is dubious. Some economists believe that China’s economic growth will average just 5 percent this year, which will result in a Chinese version of an economic recession. To average 5 percent, recent economic growth there may have fallen closer to zero than they admit.

DAVOS is testimony to globalism. If anyone thinks that this economic recession is local and can be solved by turning inward toward protectionism, they do not appreciate the flat world reality of globalism today.

Hardship triggers anxiety which some mistakenly believe can be relieved by protectionism. The U.S. has proven that it is not above capitulating to the condition with the “Buy American” provision in the stimulus package.

The more prolonged the economic malaise, the greater the pressure to succumb to protectionism and suck the whole world economy into a black hole.

While U.S. citizens would concur with some of the world’s criticism directed at Wall Street as they are none too happy with much that has occurred there, we must still remember that the capitalistic system was responsible for the unprecedented creation of global wealth that has occurred in this K-Wave cycle.

Capitalism and globalism have turned hundreds of millions of people from serfs and peasants into bona fide consumers and it will be the engine of economic recovery for the world economy, too.

David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.