The New Golden Age: Delayed, but not Extinguished

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The New Golden Age: Delayed, but not Extinguished

As explained in previous issues of Trends, every five or six decades a revolutionary new technology reaches "critical mass" and unleashes an extraordinary period of dramatically rising affluence.  That extraordinary period invariably follows an economic depression that separates the "early adoption" of each revolutionary technology from the later stage of the revolution, when it fundamentally transforms the economy at every level.

Over the past two centuries, the world has experienced five great "Tech Booms," or revolutions:

  • The first Tech Boom was the Industrial Boom, beginning in 1771, in which machinery delivered quantum leaps in the productivity of the manufacturing industry.
  • The second was the Railway Boom, starting in 1829, in which railroads and steam power cut transportation costs dramatically.
  • The third was the Steel Boom, starting in 1875, in which large-scale productions of inexpensive steel and other industrial metals made breakthroughs like steel ships, the electrical grid, suspension bridges, and elevators possible for the first time.
  • The fourth Tech Boom was the Mass-Production Boom, beginning in 1908, which created mass-produced cars, appliances, and other goods on assembly lines at increasingly affordable prices. 
  • The fifth Tech Boom, originating in 1971, is the on-going Information or Digital Boom, which has brought the wonders of computing power to nearly every product, service, and locale.

As our colleague Carlota Perez has demonstrated in lectures and books, most notably Technological Revolutions and Financial Capital:  The Dynamics of Bubbles and Golden Ages,1 each of these Tech Booms, which she calls techno-economic revolutions, goes through a predictable sequence starting with the first phase that we will call a technological introduction. 

The technological revolution typically starts with a breakthrough Perez refers to as a "big bang."  In the case of the Digital Revolution, the Big Bang was the invention of the first microprocessor by Intel.  The technological introduction that followed, in the late '70s and the '80s, brought us the PC and paved the way for a financial boom in the '90s, which we know as the dot-com bubble.   A financial boom is the second phase of every revolution.

Inevitably, every such financial bubble is followed by a collapse.  We experienced that collapse in 2000, and it bore a strong resemblance to the prior collapse in 1929...

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