How change begets more change

Rarely will you find an author or analyst who really seeks to digest a topic in its full breadth and depth. More often than not, the writer will give in to the temptation of zooming in early, focusing through a particular lense, taking a specific angle – in order to get a broad topic under some level of control. The result of such efforts will likely be useful within its narrow scope, but it can hardly be comprehensive. That’s characteristic of much writing and thinking on innovation: all too often, ideas gravitate around either the technological, or the economic, or the societal aspects. And whichever aspect will act as the chosen main character of the play, the other two will serve as mere support acts.

Against this backdrop, the work of the British-Venezuelan scholar Carlota Perez stands out as original, daring and bold. With her 2002 landmark book on Technological Change and Financial Capital: The Dynamics of Bubbles and Golden Ages, she delivers nothing less than a comprehensive model to describe our long-term social development. For her, the play has three main characters: technology, economy, and society. Each of them plays a vital role, and each of them by itself drives change, as much as it is driven by the changes of the others.

Perez identifies three distinct spheres of change, each of them shaped by the internally back and forth between two “forces”:

  • Technological change – Does a technology revolution actually progress to create a new techno-economic paradigm?
  • Economic change – Does the shift from production capital to financial capital and back sufficiently support necessary investments?
  • Institutional change – Do new socio-political ideas reshape the socio-institutional framework?

Each of these spheres follows its own rhythm, with its own specific inertia. For example, economic change (due the agility of financial capital) will respond to some technological revolution a lot faster than institutional change. And that’s the other key characteristic of Perez’ perspective: each of the spheres drives change in the other spheres, as much as it is driven by their changes. The result defies any simplistic attempt at identifying the one prime mover. Instead, Perez advocates a truly holistic approach that is looking for the complex interactions between many actors, many processes, many drivers.

The complex interactions between these three spheres of change are the defining forces behind our social development since the Industrial Revolution. They caused five Great Surges of Development so far, each unique in its historic context and the underlying technology, but each following a principal sequence of phases. In her book, Perez presents a fascinating concept of social development that is far from pre-determined, that comes in ebbs and tides, and that is affected by technology, economy, and institutions alike. She resists the temptations of technology-determinism and emphasises socio-political choices instead: We are not at the mercy of ‘what technology wants‘; but rather in charge of society’s fate to make it what we want it to be.

It is practically impossible in just a few paragraphs to do justice to Carlota Perez’ well-researched and carefully thought-through ‘think piece‘ (that’s actually how she introduces her book). Hence I’ll take a little time to walk you through her concept in more detail – over a few upcoming posts.

So please stay tuned!

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