Next Economy: Is It Really Different This Time?

I finally got to Carlota Perez’s, Technological revolutions and financial capital: The dynamics of bubbles and golden ages. It’s a terrific book that is well worth the attention of any futurist. But here, I’d like to focus on the aspects that relate to the “next economy” theme we’ve been exploring recently.

For those new to Perez, let me lay out the basic idea. (Table 1 above is on page 11 in the book.) Perez says the we have a major techno-economic paradigm shift roughly every fifty years, that follows a consistent multi-phase pattern. It leads to “the massive replacement of one set of technologies by another.” There is a big-bang event that kicks of the 50-year cycle, roughly divided in half. The first half is the installation period and the second is deployment. There is an irruption and frenzy phase as part of installation, followed by synergy and maturation phases in deployment. In short, the rapid growth of installation eventually leads to a bubble and crash, and deployment takes the best of what’s left and the new paradigm eventually flourishes and matures. Think of these phases along an S-curve and you’ve got it.

Pretty compelling stuff! So, the question I asked myself, naturally, is what we’ve been exploring as the “next economy” really leading to something new, or is it just the next 50-year cycle? Keep in mind that during the last frenzy phase/bubble — the dot.com revolution in the late 1990s/early 2000s — there was a lot of talk of a new economy. Would we be naïve to suggest something is really different this time?

I dunno. It seems to me the first revolution, the Industrial Revolution, really kicked off the present capitalist system. Obviously, lot of changes in the system, but it started the move away from agriculture and there have been 5 cycles so far. So the question seems to be, is there a sixth wave, probably based on bio-nano and maybe robo, that is going to be the next cycle, which would keep the current capitalist system more or less intact? Or is that system fundamentally broken, such that we are back at the “industrial revolution” stage of events that will kick off a new system (rather than a new paradigm within the existing system)?

In the Houston Foresight program, we observe that transformations are pretty rare. Inertia, vested interests, and general resistance to change are almost always stronger than we think. And in the case of the next economy, what seems to be pretty clear is that we have no real idea on what that next system should be – thus the three dozen or so concepts we’ve gathered. It is unlikely that we will choose to transform to something that is not yet clear; only the collapse of the present system would likely hasten a transformation at this point. But really that’s why were investigate transformative ideas of what’s next – to help create an image of what that transformation future might look like.  — Andy Hines

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