I continue to be fascinated by Carlota Perez’ work on Technological Revolutions and Financial Capital. Briefly, she identifies 50 or so year periods of great economic advancement, followed by a bust which then creates the conditions for a period of steady growth and prosperity; each period goes through five phases:
1. Irruption, which inaugurates the surge through a technological big bang in a world threatened by stagnation and inflames the imagination of young entrepreneurs
2. Frenzy, a time of new millionaires, when financial capital takes over; the rich get richer at the expense of the poor (Engels works were inspired in this phase in the 1840s)
3. The turning point, generally a ‘panic’ or a crash, a time of fundamental changes required to move the economy from the Frenzy mode
4. Synergy, often a true golden age if the framework created during the turning point creates the conditions for a sustained build out
5. Maturity – gradual saturation of markets creating the conditions of the next irruption; those who reaped the full benefits of the golden age hold on to their beliefs in a complacent blindness in the face of increasing dissatisfaction and frustration
Here are Perez’ five great technological revolutions:
o The industrial revolution, which she dates from 1771 when Arkwright’s mill opens in Cromford, Britain; turning point 1793-1797
o The age of steam and railways, dating from the test of the ‘Rocket’ steam engine for the Liverpool-Manchester railway in 1829; turning point 1848-1850
o The age of steel, electricity and heavy engineering, starting with the opening of the Carnegie Bessemer steel plant in Pittsburgh; turning point 1893-1895
o The age of oil, the automobile and mass production when the first Model T rolls off the assembly line in Detroit; turning points: Europe, 1929-1933; US 1929-1943
o The age of information and telecommunications, with the quiet announcement (at the time) of the Intel microprocessor in Santa Clara; turning point 2001 - ????
The intriguing element of her work is her investigation of how a new technology, often misunderstood at the time, launches a sequence of events that over time gather steam (OK, that was intentional…) and eventually create whole new industries and economic structures completely beyond the power of the inventor to envision. She writes:
“Each technological revolution results from the synergistic interdependence of a group of industries with one or more infrastructural networks…The technologies and products involved are not only those where the major breakthroughs have occurred. It is often the interlinking of some of the new and some of the old that generates the revolutionary potential. In fact, many of the products and industries coming together into the new constellation had already existed for some time, either in a relatively minor economic role or as important complements for the prevailing industries.
"This was the case of coal and iron which after a long history of usage during and before the Industrial Revolution, were transformed by the steam engine into the motive industries of the Age of Railways. Oil was developed for many uses since the 1880s by an extremely active industry; the same can be said about the internal combustion engine and for the automobile, which was produced as a luxury vehicle for quite some time. But it is the conjunction of all three with mass production that makes them become part of a veritable revolution.
"Electronics existed since the early 1900s and in some ways was crucial in the 1920s; transistors, semiconductors, computers and controls were already important technologies in the 1960s and even earlier. Yet it is only in 1971, with the microprocessor that the vast new potential of cheap microelectronics is made visible; the notion of a ‘computer on a chip’ flares the imagination and all the related technologies of the information that come together into a powerful cluster.”
I'm desparately trying to determine what the next technology constellation is - what are your thoughts?
