The Death and Birth of Technological Revolutions: Insights and Actionable Advice

The Death and Birth of Technological Revolutions: Insights and Actionable Advice

Technological revolutions have shaped our world and propelled us forward in unimaginable ways. From the Age of Steam and Railways to the Age of Information and Telecommunications, each revolution has followed a similar cycle, as argued by Perez. Understanding this cycle can provide valuable insights into the current and future state of our technological landscape.

Perez suggests that each revolution goes through two distinct periods, each lasting about three decades. The first period is the Installation Period, characterized by the emergence of new technology and the pursuit of real-world applications. This period is filled with excitement and divides society, widening the gap between the rich and the poor. However, it also leads to unsustainable imbalances in the economy.

The turning point between the two periods marks the beginning of the Deployment Period, also known as the "golden age." This is when the new paradigm becomes a significant force, overcoming the resistance of the old paradigm and reshaping the fabric of the economy. During this period, governments play a crucial role in making social-political choices that favor the revolution. For example, after the World War, governments implemented policies that favored suburbanization and consumerism, leading to a boom in the mass production revolution.

One important insight from Perez is that the demand driving job growth is not solely about the technology itself but also about the new lifestyle the technology enables. This highlights the importance of understanding the societal impact of technological revolutions and aligning policies and investments accordingly.

Another key observation is that new technological revolutions create opportunities for newcomers to "leapfrog." Belgium, France, and the USA caught up in the installation period of the second surge, while Germany and the USA forged ahead in the third. In the present globalized world, the incorporation of more countries into global growth, investment, production, and consumption promises massive market expansion.

However, as markets saturate and technologies mature, profits begin to feel the productivity constriction. This leads to concentration through mergers, acquisitions, and export drives. The search for technological solutions outside the current paradigm sets the stage for the decline of the current mode of growth and the birth of the next technological revolution.

So, what can we learn from these insights? Here are three actionable pieces of advice: