Technological Revolutions And Financial Capital

Carlota Perez's Technological Revolutions And Financial Capital: The Dynamics of Bubbles and Golden Ages ISBN:9781843763314, reading because Fred Wilson recommended it. (Published 2002!)

Her website: http://www.carlotaperez.org/

Builds on Wave Theory. See also Crossing The Chasm, Whole Product, Life Cycle.

Buying/reading experience: 2011-06-11-BuyingGoogleEbook

Fred Wilson interview 2011-10-08-WilsonInterviewingPerez

My Summary:

Pictures of some tables: FlickR:Carlota Perez

Detailed Table Of Contents.

Introduction: An Interpretation

Part One:Technological Revolutions And Successive Great Surges Of Development

The Turbulent Ending of the Twentieth Century

Technological Revolutions and Techno-Economic Paradigms

  • A Technological Revolution can be defined as a powerful and highly visible cluster of new and dynamic technologies, products and industries, capable of bringing about an upheaval in the whole fabric of the economy and of propelling a long-term upsurge of development. It is a strongly interrelated constellation of technical innovations, generally including an important all-pervasive low-cost input,6 often a source of energy, sometimes a crucial material, plus significant new products and processes and a new infrastructure. The latter usually changes the frontier in speed and reliability of transportation and communications, while drastically reducing their cost. The irruption of such significant clusters of innovative industries in a short period of time would certainly be enough reason to label them as 'technological revolutions.' Yet what warrants the title for the present purposes is that each of those sets of technological breakthroughs spreads far beyond the confines of the industries and sectors where they originally developed. Each provides a set of interrelated generic technologies and organizational principles that allows and fosters a quantum jump in potential productivity for practically all economic activities. This leads each time to the modernization and regeneration of the whole productive system, so that the general level of efficiency rises to a new height every 50 years or so (see Figure 2.1).
    • If Knowledge Growth is accelerating, why is time between revolutions not decreasing? If if there are constraining factors, you'd expect some quickening...
  • The main vehicle of diffusion of that set of generic 'tools' - hard, soft and ideological - which together modify the Best Practice frontier for all, is what the author has termed a 'Techno Economic Paradigm'. It is 'economic' best practice because each technological transformation brings with it a major shift in the relative price structure that guides economic agents toward the intensive use of the more powerful new inputs and technologies. It is a 'Paradigm,' in the Kuhnian sense, because it defines the model and the territory for 'normal' innovative practice, promising success to those that follow the principles incarnate in the core industries of the revolution.
  • a. Five technological revolutions (surges) in two hundred years
  • b. Five constellations of new industries and infrastructures
  • c. Five techno-economic paradigms; five changes in organizational 'common sense'
  • d. Revolutions, paradigms and great surges of development

The Social Shaping of Technological Revolutions

  • a. From technological innovations to institutional revolutions
  • b. The absorption of technological revolutions as decoupling and recoupling of the system
  • c. Why technical change occurs by revolutions

The Propagation of Paradigms: Times of Installation, Times of Deployment

  • a. Creative destruction and social polarization
  • b. Installation and deployment periods: Decoupling and recoupling of the economy and institutions

The Four Basic Phases of Each Surge of Development

  • a. The irruption phase: A time for technology
  • b. The frenzy phase: A time for finance
  • c. The Turning Point: Rethinking and re-routing development
  • d. The synergy phase: A time for production
  • e. The maturity phase: A time for questioning complacency

Uneven Development and Time-Lags in Diffusion

  • a. Uneven and differentiated growth patterns rather than long swings in the aggregate
  • b. Delayed sequences in the spread of technologies across the world

Part Two: Technological Revolutions And The Changing Behavior Of Financial Capital

Financial capital and production capital

  • a. Different functions; different criteria
  • b. The changing relationship between financial and production capital
  • c. Recurrent phases and financial crises

Maturity: Financial capital planting the seeds of turbulence at the end of the previous surge

  • a. ‘Power seeking’ behavior
  • b. Redeployment: Investing away from the core countries and sectors
  • c. Idle money leads to bad loans
  • d. Other questionable practices
  • e. Discovering the new technologies

Irruption: The love affair of financial capital with the technological revolution

  • a. Coexistence of two paradigms; coexistence of two behaviors
  • b. New ‘Risk capital’ instruments
  • c. Facilitating production, trade and purchase of new goods. Funding the rejuvenation of old core branches
  • e. Adoption of new technologies by the financial world
  • f. Expecting all investment to be as profitable

Frenzy: Self sufficient financial capital governing the casino

  • a. Decoupling and widening social gaps
  • b. Speculating with old wealth: Asset inflation
  • c. Crises in the weaker nodes of the world economy
  • d. Windows of opportunity for catching up
  • e. Over-funding the revolutionary industries: Manias and frantic competition
  • f. Mergers and the creation of oligopolies
  • g. Ethical softening and opacity
  • h. Increasing tensions between the money and real economies

The Turning Point: Rethinking, regulation and changeover

  • a. The fundamental causes of the after-Frenzy recession
  • b. The collapse of the bubble
  • c. The party’s over: Crashes as the door to regulation
  • d. The model and the historical record
  • e. Politics and the question of handing power over to production capital
  • f. The long depression of the 1930s in the United States

Synergy: Financial capital supporting the expansion of the paradigm across the productive structure

  • a. An adequate framework for fruitful recoupling
  • b. Enabling institutional innovations
  • c. A shared and embedded paradigm: Flourishing synergy and convergent expansion
  • d. The changing role of technology
  • e. The passage to Maturity: Tensions and dispersion again

The changing nature of financial and institutional innovations

  • a. Financial innovations from phase to phase
  • b. Financial innovations from paradigm to paradigm
  • c. Institutional innovations: From old to new economy

Part Three: The Recurring Sequence, Its Causes And Implications

The sequence and its driving forces

  • a. A summary of the sequence and its elements
  • b. The forces behind the sequence
  • c. The difficult balance between private and social interest

The implications for theory and policy

  • a. The power and the dangers of an interpretation based on recurrence
  • b. Changing Times; Changing Views
  • c. Changing Times, Changing policies

Epilogue: The World At The Turning Point

Bibliography

Index

List Of Figures

  • 2.1. The double nature of technological revolutions
  • 3.1. The life cycle of a technological revolution
  • 4.1 Two different periods in each great surge
  • 4.2. Steel displacing iron as the main engineering material from the second to the third surge
  • 4.3. Decoupling of the system: the differing performance of the 'high-tech' sector and the rest of the economy in the USA, 1989-96
  • 4.4. Oil and automobile industries replacing steel as engines of growth from the third to the fourth surge.
  • 5.1. Recurring phases of each great surge in the core countries
  • 5.2. Approximate dates of the installation and deployment periods of each great surge of development
  • 6.1. The geographic outspreading of technologies as they mature
  • 7.1. The recurring sequence in the relationship between financial capital (FK) and production capital(PK)
  • 7.2. Five successive surges, recurrent parallel periods and major financial crises 8.1. The recurrence of loan fever and default: The Latin American case
  • 10.1. The diverging growth of the New York Stock Market and US GDP 1971-1999
  • 11.1. The rise and fall of the NASDAQ bubble 1971-2001
  • 14.1. Development by surges: The elements of the model and their recurring changes
  • 14.2. The dynamics of the system: Three spheres of change in constant reciprocal action
  • 15.1. Paradigm shift and political cleavage

List Of Tables

  • 2.1. Five successive technological revolutions 1770s to 2000s
  • 2.2. The industries and infrastructures of each technological revolution
  • 2.3. A different techno-economic paradigm for each technological revolution: 1770 to 2000s
  • 8.1. Fluctuations in UK foreign investment (at current prices) as percentage of total net capital formation, 1855-1914
  • 13.1 A tentative typology of financial innovations
  • 13.2 The shifting behavior of finance capital from phase to phase of each surge

Edited: |

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