Big Pictures of Technology and
Industry/Business: Part II
Daniel Hao Tien Lee
http://danieleewww.yolasite.com/
Outline
• Kondratiev Wave
• Big Pictures of Carlota Perez’s: : The Dynamics
of Bubbles and Golden Ages
• Video Course: Prof Carlota Perez at FINNOV
Final Conference 2012, ICI, London, UK
http://www.youtube.com/watch?v=k8S0OSx
Wmuo&list=UUX6QveqMpgeaEIPJvndQ90Q&i
ndex=1&feature=plcp
• Fun Drill !
Kondratiev Wave
• The Kondratieff Wave is an economic theory that
states that Western capitalist economies are
susceptible to extreme performance volatility as
they expand and contract over the years. Unlike
what is referred to as the business cycle, the
Kondratieff Wave holds that these fluctuations
are in fact part of a much longer cycle periods
known as “super cycles” that last between 50-60
years or longer depending upon factors such as
technology, life expectancy, etc
Kondratiev Wave
Kondratiev Wave
Period
First Industrial
Revolution (Mechanical
Age)
Railroad and Steam
Engine Era
Age of steel, electricity
and internal
combustion
Date
(Prosperity
to
prosperity)
Innovation
Saturation point
Circa 1787–
1843
Cotton-based technology: spinning weaving;
atmospheric stationary steam engines replaced by
high pressure engines, wrought iron, iron displaces
wood in machinery, canals, turnpikes. Development
of machine tools
Cotton textiles: British market saturated ca.
1800. By 1840, 71% of British cotton textiles
were exported
Circa 1842–
1897
Age of steam railways, steam shipping and
machinery. First inexpensive steel, telegraph, animal
powered combine harvesters, etc. Final
development of and diffusion of machine tools and
interchangeable parts. Emergence of petroleum and
chemical industries and heavy industries after 1870.
Beginning of public water and sewer systems.
Canals: Late 1840s1870: Steam exceeds water
power and animal power. 1890s: Railroads.
Track mileage continued to grow but much is
later abandoned.
Steel, electric motors, electrification of factories and
households, electric utilities, aluminum, chemicals
and petrochemicals, internal combustion engine,
automobiles, highway system, Fordist mass
production, telephony, beginning of motorized
agricultural mechanization, radio. Electric street
railways help create streetcar suburbs. Build out of
urban public water supply and sewage systems.
1917: Railroads nationalized. Post World War I
short depression. Railroads and electric street
railways decline after 1920. Horses, mules and
agricultural commodities: 1919. After 1923
industrial output rises as workforce slowly
declines. Depression of 1930s: Overcapacity in
manufacturing, real estate. Work week
reduced from 50 to 40 hours in mid-1930s.
Total debt reaches 260% of GDP during early
1930s.
1897–1939
Kondratiev Wave
Period
War and Post-war Boom:
Suburbia
Post Industrial Era:
Information Technology
and care of elderly
Date
(Prosperity
to
prosperity)
Innovation
Saturation point
1939–1982?
Oil displaces coal. Suburban growth and
infrastructure. Greatest period of agricultural
productivity growth 1940s-1970s. Consumer
goods, semiconductors, business computers,
plastics, synthetic fibers, fertilizers, television and
electronics, green revolution, military-industrial
complex, diffusion of commercial aviation and air
conditioning, beginning nuclear utilities.
1940s-50s: Diesel locomotives replace
steam.1971: Peak U.S. oil production 1973:
Peak steel consumption in U.S. Pennsylvania
steel cities and industrial midwest turn into
"rust belt".
1973: Slow economic and productivity
growth noted. 1980s: Highway system near
saturation
Fiber optics and Internet, personal computers,
wireless technology, on line commerce,
biotechnology, Reagan's "Star Wars" military
projects. Energy conservation. Beginning of
industrial robots. In the U.S. health care becomes
a major sector of the economy (16%) and
financial sector increases to 7.5% of economy.
1984: Peak U.S. employment in computer
manufacturing. Long term decline in U.S.
capacity utilization
1990s: Automobiles, land line telephones,
chemicals, plastics, appliances, paper, other
basic materials, commercial aviation.
2001:Computers, fiber optics 2000s: Crop
yields approach limits of photosynthesis.
2008: Developed world on verge of
depression. Widespread overcapacity except
some nonferrous metals and oil. Large
housing and commercial real estate surplus.
GDP no longer responds to increases in debt.
Total debt exceeds 360% of GDP by late 2009.
1982? – ??
Kondratieff cycles – long waves of prosperity.
Rolling 10-year yield on the S&P 500 since 1814 till
March 2009 (in %, p. a.)
Five Successive Technological Revolutions,
1770s to 2000s
Technologic
al revolution
Popular name for
the period
Core country or
countries
Big-bang initiating the
revolution
Year
FIRST
The ‘Industrial
Revolution’
Britain
Arkwright’s mill opens in
Cromford
1771
SECOND
Age of Steam and
Railways
Britain (spreading to
Continent and USA)
Test of the ‘Rocket’ steam
engine for the LiverpoolManchester railway
1829
THIRD
Age of Steel,
Electricity and Heavy
Engineering
USA and Germany
forging ahead and
overtaking Britain
The Carnegie Bessemer
steel plant opens in
Pittsburgh, Pennsylvania
1875
FOURTH
Age of Oil, the
Automobile and
Mass Production
USA (with Germany
at first vying for world
leadership), later
spreading to Europe
First Model-T comes out of
the Ford plant in Detroit,
Michigan
1908
FIFTH
Age of Information,
Computing, and
Telecommunications
USA (spreading to
Europe and Asia)
The Intel microprocessor is
announced in Santa Clara,
California
1971
Source: Carlota Perez 2002
Big-Bang
• For society to veer strongly in the direction of a new
set of technologies, a highly visible ‘attractor’ needs
to appear, symbolizing the whole new potential and
capable of sparking the technological and business
imagination of a cluster of pioneers.
• This attractor is not only a technical breakthrough.
What makes it so powerful is that it is also cheap or
that is makes it clear that business based on the
associated innovations will be cost-competitive. That
event is defined here as the big-bang of the
revolution.
Big-Bang of Each Revolution
(initiated by a narrow community of entrepreneurs and
technical people)
• Arkwright’s Cromford mill opened in 1771: the future paths to
cost reducing mechanization of the cotton textile and other
industries were powerfully visible
• Stephenson’s ‘Rocket’ steam locomotive announced and
triumphed in 1829: the world of railways and steam power
were non-stoppable
• Carnegie’s highly efficient Bessemer steel plant opened in 1875:
inaugurating the Age of Steel
• Ford’s the first Model-T prototype in 1908: layout of the future
of production patterns for standardized, identical products, and
choice of Age of Oil
• Intel’s first microprocessor in 1971: the original and simplest
‘computer on a chip’ seen as the birth of the Information Age,
based on the amazing power of low-cost microelectronics
Double Nature of Technological Revolutions
A CLUSTER OF NEW DYNAMIC
PRODUCTS, TECHNOLOGIES
INDUSTRIES AND INFRASTRUCTURES
NEW INTERRELATED
GENERIC TECHNOLOGIES
AND ORGANIZATIONAL PRINCIPLES
generating explosive growth
and structural change
capable of rejuvenating and
upgrading mature industries
A CHANGE OF TECHNO-ECONOMIC PARADIGM
New engines of growth
for a long-term upsurge
of development
A higher level
of potential productivity
for the whole
productive system
Source: Carlota Perez 1998
Big-Bang as Creative Destruction
Five Great Surges of Development in 240 Years
(driven by successive technological revolutions with collapse and
readjustment)
Courtesy of Source: Based on Technological Revolutions and Financial Capital: The Dynamics
of Bubbles and Golden Ages, Carlota Perez; IBM 2004 Annual Report
Scientific Technology Revolution Cycles
(Nominal Time 50-60 Years: Perez 2002, Hirooka, 2003)
Is modern technology revolution driven by model or luck, or
spirit ?
Courtesy of John. P. Dismukes, U. Toledo 2005
Life Cycle of a Technological Revolution
Phase One
Phase Two
Phase Three
Last new products
and industries.
Earlier ones approachin
maturity and market
saturation
Full constellation
(new industries,
technology systems
And infrastructures)
Early new
products and
industries.
Explosive growth
and fast innovation
Gestation
Paradigm
period
configuration
Big-bang
Phase Four
Full expansion of
innovation and
market potential
Introduction of successive new
products, industries and
technology systems, plus
modernization of existing ones
Around half a century
Constriction of potential
Courtesy of Carlota Perez 2002
Two Different Periods in Each Great Surge
-- INSTALLATION PERIODTurning-- DEPLOYMENT PERIOD
point
Big-bang
Next Big-bang
Courtesy of Carlota Perez 2002
Recurring Phases of Each Great Surge in the Core
Countries
Turning
--------INSTALLATION PERIOD point -- DEPLOYMENT PERIOD
MATURITY
Socio-political split
Previous Great surge
Last products and industries
Market saturation and
technological maturities
of main industries
Golden Age
Disappointment vs. complacency
Coherent growth with
Increasing externities
Production and employment
SYNERGY
FRENZY
Financial bubble time
Intensive investment in the revolution
Decoupling of the whole system
Polarization of rich and poor
Gilded Age
Techno-economic split
IRRUPTION
Irruption of the technological
revolution
Decline of old industries
Unemployment
Big-bang
Crash
Institutional
recomposition
Next Big-bang
Courtesy of Carlota Perez 2002
The Irruption Phase:
A Time for Technology
• It begins with the big-bang of the technological revolution
amidst a world threatened with stagnation, as in Britain in the
1830s and 1870s or the USA in the 1970s.
• This period is marked by increasing unemployment stemming
from various sources, ranging from economic stagnation,
through rationalization efforts, to technological
replacement. – The world seems to be falling apart and the
old behaviors and polices are impotent to save it.
• Meanwhile, the new entrepreneurs are gradually articulating
the new ideas and successful behaviors into a new bestpractice frontier that serves as the guiding model or technoeconomic paradigm.
The Frenzy Phase:
A Time for Finance
• A phase characterized by very strong centrifugal trends in society at
large – a small but growing portion at the top is rich and getting richer
while there is deterioration and growing outright poverty at the bottom
• A time of speculation, corruption and unashamed love of wealth – ‘The
Gilded Age’ which appears of shinning prosperity and its socially
insensitive inside of base metal
• Frenzy phase is also one of intense exploration of all the possibilities
opened up by the technological revolution – though bold and diversified
trial and error investment
• A phase of fierce ‘free’ free competition with tremendous excess money
poured into the infrastructure (e.g. canal mania, railway mania, Internet
mania), often leading to overinvestment that might not fulfill
expectations – a sort of gambling economy with asset inflation in the stock
market, looking like a miraculous multiplication of wealth  so late Frenzy
phase becomes “Financial Bubble time”  Recession time
The Turning Point:
Rethinking and Rerouting Development
• A process of contextual change to move the economy from a Frenzy mode,
shaped by financial criteria, to a Synergy mode, solidly based on growing
production capabilities
– e.g. Bretton Woods meetings, enabling the orderly international Deployment
of the fourth surge
– e.g. The repeal of the Corn Laws in Britain, facilitating the Synergy of the
second
• The turning point has to do with the balance between individual and social
interests within capitalism – it is the swing of the pendulum from the
extreme individualism of Frenzy to giving greater attention to collective
well being, usually through the regulatory intervention of the state and
civil societies
• The unsustainable structural tensions that build up the economy and
society, especially during Frenzy, must be overcome by a recomposition of
the conditions for growth and development
The Synergy Phase:
A Time for Production
• Synergy is the early half of the deployment period. This phase
can be the true ‘Golden Age’
– e.g. Victorian England after the Great exhibition
– e.g. America after the Second World War
• A mode of growth based on social cohesiveness, moral
principles are in force, ideas of confidence flourish and
business is satisfied about its positive social role – it’s a time
of advance in labor laws and other measures for social
protection of the weak, a time for income redistribution in
one form or another, leading to enlarged consumption
markets. It’s above all the reign of the ‘middle class’. Fast and
easy millionaires are rare, though investment and work lead
to persistent accumulation of wealth. “ Production is the key
word in this phase”
The Maturity Phase:
A Time for Questioning Complacency
• All the signs of prosperity and success are still around.
Those who reaped the full benefits of the ‘golden age’
continue to hold on to their belief in the virtues of
the system and to proclaim eternal and unstoppable
progress, in a complacent blindness, which could be
called the ‘Great Society Syndrome’
• Markets are saturating and technologies maturing,
therefore profits begin to feel the productivity
constriction, leads to concentration through mergers
or acquisitions, as well as export drives and
migration of activities to less-saturated markets
abroad
Approximate Timeline of Each Great Surge of
Development
(1770s and
early 1980s)
(late 1780s
and early
1790)
(1813-1829)
(1850-1857)
(1857-1873)
1793-97
(1840s)
(1830s)
(1798-1812)
1848-50
(1895-1907)
(1875-1884)
(1908-1918)
1893-95
(1884-1893)
(1908-1920)
(1920-1929)
(1971-1987)
(1987-2001)
Europe
1929-33
USA
1929-43
2001-?
(1943-1959)
(1960-1974)
Geographic Outspreading of Technologies as They
Mature (USA case)
Net
exporter
Time
New products
Net
importer
Mature
products
LDC: less developed country
Phase I
Phase II
Phase III
Phase IV
Phase V
All production
in USA
Production
started in
Europe
Europe exports
to LDCs
Europe
exports to
USA
LDCs exports to
USA
US Exports to
many
countries
US Exports
mostly to
LDCs
US Exports to
LDCs displaced
Mass-Production Paradigm and Information
Revolution
• 1950s was a period of expansion in the USA, which served to
pull the front-running European countries
• By the 1960s the main dynamism moved towards Europe and
Asia, producing the so-called ‘miracles’ in Germany, Italy and
Japan
• In the 1970s, it was Brazil, Taiwan and Korea that had taken
over the baton
• After the mid-1970s, some of the oil countries were able to
attempt growth using the mature energy-intensive
technologies in aluminum, petrochemicals and so on. But by
then, the information revolution was already taking force in
the USA and other core countries and the organizational
revolution was catapulting Japan to the front ranks while the
stagflation of the irruption phase was entering he scene of the
old advanced countries.
Definition of Financial Capital and Production Capital
•
Financial capital (paper wealth/economy)
– Represents criteria and behavior of possessing wealth in the form of money or
other paper assets – to use money to make more money by receiving interest,
dividends or capital gains
– Tools: deposits, stocks, bonds, oil futures, derivatives, diamonds or whatever
– Services: banks, brokers and other intermediaries who provide information to
make paper wealth growth
– Mobile and footloose in nature
– Flee from danger but enable the rise of the new entrepreneurs
•
Production capital (real wealth/economy)
– Generate new wealth by producing goods or performing services (including
transport, trade and other enabling activities)
– Typical with borrowed money from financial capital or use their own money
– Purpose of production capital is to produce in order to be able to produce more –
objective is to accumulate greater and greater profit-making capacity
– Tied to concrete products, and knowledge about product, process and markets is
the very foundation to potential success
– Roots in an area of competence and even in a geographic region
– Has to face every storm by holding fast, ducking down or innovating its way
forward or sideways – but when it comes to radical changes, incumbent
production capital can become conservative
Recurring sequence in the relationship between financial
capital (FK) and production capital (PK)
Turning
--------INSTALLATION PERIOD point -- DEPLOYMENT PERIOD
MATURITY
Signs of Separation
Previous Great surge
IRRUPTION
Love affair of FK
with revolution
Financial capital
searching on its own
SYNERGY Decreasing investment opportun
Recoupling FK-PK Idle money moving to new area,
sectors and regions
Production capital at the helm
Recoupling of real and paper wealth
FRENZY
Decoupling FK-PK Coherent growth
Bubble economy
Divorce between paper and real value
Asset inflation
Financial Revolution
Intense funding of the new technologies
Disdain of old assets
Big-bang
Crash
Next Great Surge
Institutional
recomposition
Next Big-bang
Courtesy of Carlota Perez 2002
Five successive surges, recurrent parallel periods and
major financial crises
?
Financial and Social Impact by Technology Revolution
• National market in the Victorian boom, from the mid-nineteenth century
after the 2nd. technology revolution: That prosperity was brought about
on the basis of a whole set of new institutions that ordered national
markets and regulated the national banking and financial worlds, which
facilitated the continued expansion of the railway system and the network
of steam-powered factories in the growing industrial cities.
• International markets arisen, two decades after the big-bang of Age of
Steel, required worldwide regulation (from the general acceptance of the
London-based Gold Standard to universal agreements on measurement,
patents, insurance, transport, communications and shipping practices),
which the structural changes in production, including the growth of
important science-related industries had to be facilitated by deep
educational reforms and social legislation.
• Mass production and massive consumption, based on the massproduction technologies of the fourth paradigm had been diffusing since
the 1910s and 1920s demanded institutions facilitating massive
consumption, by the people or by the governments. Only is such a context
could full flourishing be achieved.
• Cohesive growth based on the information revolution, would seem to
require a global network of institutions, involving the supranational,
national and local regulatory levels --- Globalization
Impact of War Expenditure
• War served to spread technology among the
adversaries and thus create future peace-time
competitors.
– The massive war expenditures of the First and Second
World War came to rescue of investment opportunities
and profits in the maturity phase of the third and fourth
surge ,respectively, in the main advanced countries.
– Vietnam war plus the intensification of the Cold War and
the Space Race, had a similar effect for the US economy
during Maturity in the fourth surge.
Attributes of Past Revolutions
• Each begins in a core country and later becomes dominant
both in economy and politics worldwide.
• Each defines new/or redefines industries and
infrastructures.
• Each generates new techno-economic paradigm
– New “common sense” innovation principles which define best
competitive practices.
• Each takes 40-60 years going through Carlota Perez’s 3stage model to spread across world:
– Installation period (Irruption and Frenzy Bubble)
• Each generates technology bubble (massive over-investment) and
later spearheads into financial panic and collapse.
– Turning point
• Each turning point required collective vision.
– Deployment period (Golden Age (Synergy) and Maturity)
• Each Golden Age has been facilitated by enabling regulation and
policies for shaping and widening markets.
Attributes of Past Revolutions
• Resistance from established firms/institutions
• Functional separation between financial capital and
production capital
• Paradigm shift led by financial capital, which forms bubble,
which bursts, leading to hyper-adaptation (common-sense)
• Production capital then controls propagation
• Huge surge is divided into two extremely different periods.
Installation period vs. Deployment period
What’s the status we have now:
Still stuck at the turning Point ;
Perez’s Recent Presentation
Courtesy of Carlota Perez 2008
The Historical Record: Bubble Prosperities, Recessions
and Golden Ages
Courtesy of Carlota Perez 2008
Courtesy of Carlota Perez 2008
Courtesy of Carlota Perez 2008
THE ELEMENTS OF THE DEMAND OPPORTUNITY SPACE
Generic technologies
Infrastructures
EXTERNALITIES
Supply
opportunity space
for INNOVATION
Sources of
DEMAND
DIRECTIONALITY
Sources of
DEMAND
VOLUME
The coherence and synergy among the elements generates self-reinforcing loops
Courtesy of Carlota Perez 2010
The demand opportunity space that shaped the Post War Golden Age
INNOVATION
ENABLERS
Cheap oil and materials
FOR MASS
Universal electricity
PRODUCTION
Road and airway network
Suburbanisation
Post-war reconstruction
Cold war
SPECIFIC
DEMAND
AS DIRECTION
FOR INNOVATION
Welfare State
Labour unions
Public procurement
Credit system
DEMAND
VOLUME, PROFILE
AND TRENDS
The various elements were provided in different proportions
in each “First World” country
The current
opportunity space
for a global
positive-sum
game
“GREEN”
Revamping
transport, energy,
products and production systems
to make them sustainable
is equivalent to
post-war reconstruction
and suburbanisation
Cheap
ICT
Full internet access
at low cost is equivalent
to electrification and
suburbanisation
in facilitating demand
(plus education)
FULL
GLOBAL
DEVELOPMENT
Incorporating
successive new millions
into sustainable consumption patterns
is equivalent to the Welfare State
and government procurement
in terms of demand creation
Courtesy of Carlota Perez 2010
The three forces defining the opportunity space are interdependent
THE FACILITATOR
ICT
Information and communications
technologies
ICTs are the main
enabling instruments
of sustainability
“GREEN”
THE DIRECTION
Internet access is
the social, economic
and geographic
frontier of the global market
FULL
GLOBAL
DEVELOPMENT
Only with sustainable
production and consumption patterns
Is full globalisation possible
THE VOLUME
There is enough space and potential to lift all boats
but the markets cannot do it without the support of enabling policies
Courtesy of Carlota Perez 2010
Each technological revolution has led to a change in consumption patterns
with new life-shaping goods and services at „affordable‟prices
DEPLOYMENTPERIOD
LIFESTYLE
1850s-1860s
Urban industry-aided
VICTORIAN LIVING in Britain
1890s-1910s
Urban cosmopolitan lifestyle of
THE BELLE EPOQUE in Europe
1950s-1960s
Suburban energy-intensive
AMERICAN WAY OF LIFE
Each style became “the good life” that shaped people's desires and values
and guided innovation trajectories
2010s-20??s
Will the developed and emerging countries
develop a variety of ICT-intensive
“GLOCAL” SUSTAINABLE LIFESTYLES ???
Courtesy of Carlota Perez 2010
The direction of innovation
after the financial collapse
ICT for green growth
and global development
Carlota Perez
Cambridge, LSE and Sussex Universities, U.K.
Tallinn University of Technology, Estonia
9TH Triple Helix Conference
Stanford, July 2011
Perhaps the most important lesson that Chris Freeman taught us is:
THAT ECONOMICS IS INCAPABLE OF UNDERSTANDING GROWTH
WITHOUT INTERDISCIPLINARITY
Economics
HISTORY
Technology
Institutions
That wider framework helps us identify long-term regularities
ANDALLOWS US TO GLEAN POSSIBLE FUTURES
FIVE TECHNOLOGICAL REVOLUTIONS IN 240 YEARS
1771
The ‘Industrial Revolution’(machines, factories and canals)
1829
Age of Steam, Coal, Iron and Railways
1875
Age of Steel and Heavy Engineering (electrical, chemical, civil, naval)
1908
Age of theAutomobile, Oil, Petrochemicals and Mass Production
1971
Age of InformationTechnology and Telecommunications
20??
Age of Biotech, Nanotech, Bioelectronics and New Materials?
EACH ONE DRIVES AGREAT SURGE OF DEVELOPMENT
AND CHANGES THE TECHNO-ECONOMIC PARADIGM GUIDING INNOVATION
Due to the massive “creative destruction” required
DIFFUSION TAKES PLACE IN TWO DISTINCT PERIODS
The first half is the
INSTALLATION PERIOD
led by finance and free markets
when innovation concentrates
to set up the new infrastructure,
to let markets pick the new winners
and to modernize the old economy
The second half is the
DEPLOYMENT PERIOD
led by production aided by the State
when innovation
spreads across the board
to reap the full
economic and social benefits
THE MAJOR BUBBLE COLLAPSE
MARKS THE SWING OF THE PENDULUM
THE HISTORICAL RECORD
Bubble prosperities, recessions and golden ages
INSTALLATION PERIOD
GREAT
SURGE
Year
country
1st
1771
Britain
2nd
1829
Britain
Bubble prosperity
TURNING
POINT
Collapse &
Recessions
DEPLOYMENT PERIOD
“Golden Age” prosperity
Canal mania
1793–97
The Great
British leap
Railway mania
1848–50
The Victorian
Boom
1890–95
Belle Époque (Europe)
“Progressive Era” (USA)
Post-war
Golden age
1875
Infrastructure bubbles
3 rdBritain / USA
of first globalisation
Germany
(Argentina, Australia, USA)
4th
1908
USA
The roaring
twenties
Europe
1929–33
USA
1929–43
5th
1971
USA
Internet mania
and financial casino
2000 &
2007/8
-????
Maturity
Global Sustainable
”Golden Age”?
The shift from financial mania and collapse to Golden Ages occurs
when enabled by regulation and policies to shape and widen markets
WHY TWO PERIODS? WHY THE BUBBLE?
RESISTANCE
TO THE NEW
Old industries
old habits
old methods
Need a period of
CREATIVE DESTRUCTION
to force modernization
UNCERTAINTY
Which products?
Which technologies?
Which companies?
Which markets?
Need to experiment
in ferocious “free market”
COMPETITION
NATURE OF
INFRASTRUCTURES
All or nothing
Invest up-front
Revenues come later
Need credit creation
through bubble boom and
short-term CAPITAL GAINS
Once the bubbles collapse, the job is done
THE NEW PARADIGM IS INSTALLED AND CAN BE DEPLOYED
But that requires a structural shift away from the casino economy
HOW WAS
THE MASS PRODUCTION
GOLDENAGE
UNLEASHED?
?
• Through very strict financial regulation in each country
Glass Steagall, “Chinese walls”, deposit insurance, capital export controls, etc.
• International stability through the Bretton Woods agreements
US dollar as “gold”, IMF, GATT, World Bank (then IBRD), etc.
• Keynesian policies for stable growth within national borders
Counter-cyclical measures, stimulus spending, etc. and a set of policies…
…INDUCING STRUCTURAL CHANGE IN FAVOR OF MASS CONSUMPTION!
THE SYNERGISTIC CONDITIONS THAT SHAPED THE POST WAR GOLDENAGE
INNOVATION ENABLERS
FOR MASS PRODUCTION
FORCES SHAPING
THE DIRECTION
OF INNOVATION
Suburbanization
Post-war
reconstruction
R&D funding
Cold war
Cheap oil
and materials
Universalelectricity
Road and airway
networks
FACILITATORS
OF DEMAND GROWTH
FOR MASS
CONSUMPTION
Welfare State
Public procurement
Labour unions
Personal credit
system
They were provided in different proportions in each “First World” country
A POSITIVE-SUM GAME
THAT TURNED WORKERS
INTO MIDDLE INCOME
CONSUMERS
AND BROUGHT
THE GREATEST BOOM
IN HISTORY
THE NEW TECHNOLOGICAL POTENTIAL
AMAJOR TECHNO-ECONOMIC PARADIGM SHIFT
A change in relative cost structures changes the direction of innovation
FROM THE LOGIC
OF CHEAP ENERGY (oil)
for transport, electricity,
synthetic materials, etc.
Preference
for tangible products
and disposability
Unthinking use
of energy and materials
TO THE LOGIC
OF CHEAP INFORMATION
its processing, transmission
and productive use
Preference
for services
and intangible value
Huge potential for savings
in energy and materials
Capacity for
Unavoidable
environmental friendliness
environmental destruction
Cheap Asian labor and the return of cheap oil
have hindered the use of this huge opportunity space
The new global
positive-sum
game
Universal
ICT
“GREEN”
GROWTH
Revamping
transport, energy, products,
production and consumption patterns
to make them sustainable
is equivalent to
post-war reconstruction
and the spread of suburbia
Full internet access
at low cost
is equivalent
to electrification
and suburbanization
in facilitating demand
(and, this time,
also education)
FULL
GLOBAL
DEVELOPMENT
Incorporating
successive new millions
into sustainable
consumption patterns
is equivalent to the Welfare State
and government procurement
in terms of demand creation
And the elements are interconnected
ICT
ICTs are the main
enabling instruments
of sustainability
“GREEN”
Internet access is
the social
and geographic frontier
of the global market
FULL
GLOBAL
DEVELOPMENT
Only with sustainable
production and consumption patterns
Is globalization possible
But we need policy consensus
involving government, business and society
GLOBAL DEVELOPMENT
is not only
a humanitarian goal
It is about healthy growth,
markets and employment
in the advanced, emerging and
developing worlds
“GREEN” is not only about
saving the planet
It is about saving the economy
and having a high (but different)
quality of life
But it cannot happen by guilt or fear
but by desire and aspiration
“GREEN” MUST BECOME THE “LUXURY LIFE”
WHAT LOOKS IMPOSSIBLE NOW MAY SEEM OBVIOUS LATER
But later it was obvious that…
it seemed impossible to imagine…
…that blue collar workers
would have lifetime jobs and
fully equipped suburban houses
with a car at the door
…or that most colonies
would gain independence
And it seemed impossible in the late 1960s…
…to expect some of the values
of the hippie movement
[back to natural materials,
organic food, etc.]
to become
the luxury norms
…increasing wages created
many more millions of consumers
for mass production and sustained growth
…the new middle classes
rising in the developing world
widened world markets for mass production
by adopting the “American Way of Life”
But now it is obvious that…
…innovations in natural textile fibers
have transformed the world of high fashion
… and innovations in distribution logistics
have made organic foods
the premium segment in supermarkets
Shifts in consumption patterns shift profit-making opportunities
THE TECHNOLOGICAL STAGE
IS SET TODAY
FOR THE GLOBAL GOLDEN AGE
OF THE 21st CENTURY
It is up to business, government and society
to agree on the convergent actions
for making it a reality