October 17, 2011
In her Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages Carlota Perez argues that the sequence, technological revolution–financial bubble–collapse–golden age–political unrest, recurs about every half century and is based on causal mechanisms that are in the nature of capitalism. These mechanisms stem from three features of the system, which interact with and influence one another:
1. the fact that technological change occurs by clusters of radical innovations forming successive and distinct revolutions that modernize the whole productive structure;
2. the functional separation between financial and production capital, each pursuing profits by different means; and
3. the much greater inertia and resistance to change of the socio-institutional framework in comparison with the techno-economic sphere, which is spurred by competitive pressures.
One of her main ideas is that each of these revolutions is accompanied by a set of ‘best-practice’ principles, in the form of a techno-economic paradigm, which breaks the existing organizational habits in technology, the economy, management and social institutions.
She argues that