big pictures of technology and industry/business: part ii daniel hao tien lee
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Big Pictures of Technology and Industry/Business: Part II
http://danieleewww.yolasite.com/
Daniel Hao Tien Lee
Outline• Kondratiev Wave• Big Pictures of Carlota Perez’s: : The Dynamics
of Bubbles and Golden Ages• Video Course: Prof Carlota Perez at FINNOV
Final Conference 2012, ICI, London, UK http://www.youtube.com/watch?v=k8S0OSxWmuo&list=UUX6QveqMpgeaEIPJvndQ90Q&index=1&feature=plcp
• Fun Drill !
Kondratiev Wave
• The Kondratieff Wave is an economic theory that states that Western capitalist economies are susceptible to extreme performance volatility as they expand and contract over the years. Unlike what is referred to as the business cycle, the Kondratieff Wave holds that these fluctuations are in fact part of a much longer cycle periods known as “super cycles” that last between 50-60 years or longer depending upon factors such as technology, life expectancy, etc
Kondratiev WavePeriod
Date (Prosperity to prosperity)
Innovation Saturation point
First Industrial Revolution (Mechanical Age)
Circa 1787–1843
Cotton-based technology: spinning weaving; atmospheric stationary steam engines replaced by high pressure engines, wrought iron, iron displaces wood in machinery, canals, turnpikes. Development of machine tools
Cotton textiles: British market saturated ca. 1800. By 1840, 71% of British cotton textiles were exported
Railroad and Steam Engine Era
Circa 1842–1897
Age of steam railways, steam shipping and machinery. First inexpensive steel, telegraph, animal powered combine harvesters, etc. Final development of and diffusion of machine tools and interchangeable parts. Emergence of petroleum and chemical industries and heavy industries after 1870. Beginning of public water and sewer systems.
Canals: Late 1840s1870: Steam exceeds water power and animal power. 1890s: Railroads. Track mileage continued to grow but much is later abandoned.
Age of steel, electricity and internal combustion
1897–1939
Steel, electric motors, electrification of factories and households, electric utilities, aluminum, chemicals and petrochemicals, internal combustion engine, automobiles, highway system, Fordist mass production, telephony, beginning of motorized agricultural mechanization, radio. Electric street railways help create streetcar suburbs. Build out of urban public water supply and sewage systems.
1917: Railroads nationalized. Post World War I short depression. Railroads and electric street railways decline after 1920. Horses, mules and agricultural commodities: 1919. After 1923 industrial output rises as workforce slowly declines. Depression of 1930s: Overcapacity in manufacturing, real estate. Work week reduced from 50 to 40 hours in mid-1930s. Total debt reaches 260% of GDP during early 1930s.
Kondratiev WavePeriod
Date (Prosperity to prosperity)
Innovation Saturation point
War and Post-war Boom: Suburbia 1939–1982?
Oil displaces coal. Suburban growth and infrastructure. Greatest period of agricultural productivity growth 1940s-1970s. Consumer goods, semiconductors, business computers, plastics, synthetic fibers, fertilizers, television and electronics, green revolution, military-industrial complex, diffusion of commercial aviation and air conditioning, beginning nuclear utilities.
1940s-50s: Diesel locomotives replace steam.1971: Peak U.S. oil production 1973: Peak steel consumption in U.S. Pennsylvania steel cities and industrial midwest turn into "rust belt".1973: Slow economic and productivity growth noted. 1980s: Highway system near saturation
Post Industrial Era: Information Technology and care of elderly
1982? – ??
Fiber optics and Internet, personal computers, wireless technology, on line commerce, biotechnology, Reagan's "Star Wars" military projects. Energy conservation. Beginning of industrial robots. In the U.S. health care becomes a major sector of the economy (16%) and financial sector increases to 7.5% of economy.
1984: Peak U.S. employment in computer manufacturing. Long term decline in U.S. capacity utilization1990s: Automobiles, land line telephones, chemicals, plastics, appliances, paper, other basic materials, commercial aviation. 2001:Computers, fiber optics 2000s: Crop yields approach limits of photosynthesis. 2008: Developed world on verge of depression. Widespread overcapacity except some nonferrous metals and oil. Large housing and commercial real estate surplus. GDP no longer responds to increases in debt. Total debt exceeds 360% of GDP by late 2009.
Kondratieff cycles – long waves of prosperity.Rolling 10-year yield on the S&P 500 since 1814 till March 2009 (in %, p. a.)
Five Successive Technological Revolutions, 1770s to 2000s
Technological revolution
Popular name for the period
Core country or countries
Big-bang initiating the revolution
Year
FIRST The ‘Industrial Revolution’
Britain Arkwright’s mill opens in Cromford
1771
SECOND Age of Steam and Railways
Britain (spreading to Continent and USA)
Test of the ‘Rocket’ steam engine for the Liverpool-Manchester railway
1829
THIRD Age of Steel, Electricity and Heavy Engineering
USA and Germany forging ahead and overtaking Britain
The Carnegie Bessemer steel plant opens in Pittsburgh, Pennsylvania
1875
FOURTH Age of Oil, the Automobile and Mass Production
USA (with Germany at first vying for world leadership), later spreading to Europe
First Model-T comes out of the Ford plant in Detroit, Michigan
1908
FIFTH Age of Information, Computing, and Telecommunications
USA (spreading to Europe and Asia)
The Intel microprocessor is announced in Santa Clara, California
1971
Source: Carlota Perez 2002
Big-Bang
• For society to veer strongly in the direction of a new set of technologies, a highly visible ‘attractor’ needs to appear, symbolizing the whole new potential and capable of sparking the technological and business imagination of a cluster of pioneers.
• This attractor is not only a technical breakthrough. What makes it so powerful is that it is also cheap or that is makes it clear that business based on the associated innovations will be cost-competitive. That event is defined here as the big-bang of the revolution.
Big-Bang of Each Revolution(initiated by a narrow community of entrepreneurs and technical people)
• Arkwright’s Cromford mill opened in 1771: the future paths to cost reducing mechanization of the cotton textile and other industries were powerfully visible
• Stephenson’s ‘Rocket’ steam locomotive announced and triumphed in 1829: the world of railways and steam power were non-stoppable
• Carnegie’s highly efficient Bessemer steel plant opened in 1875: inaugurating the Age of Steel
• Ford’s the first Model-T prototype in 1908: layout of the future of production patterns for standardized, identical products, and choice of Age of Oil
• Intel’s first microprocessor in 1971: the original and simplest ‘computer on a chip’ seen as the birth of the Information Age, based on the amazing power of low-cost microelectronics
Double Nature of Technological Revolutions
Source: Carlota Perez 1998
A CLUSTER OF NEW DYNAMIC PRODUCTS, TECHNOLOGIES
INDUSTRIES AND INFRASTRUCTURESgenerating explosive growth
and structural change
NEW INTERRELATEDGENERIC TECHNOLOGIES
AND ORGANIZATIONAL PRINCIPLEScapable of rejuvenating and upgrading mature industries
New engines of growthfor a long-term upsurge
of development
A higher level of potential productivity
for the wholeproductive system
A CHANGE OF TECHNO-ECONOMIC PARADIGM
Five Great Surges of Development in 240 Years (driven by successive technological revolutions with collapse and readjustment)
Courtesy of Source: Based on Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages, Carlota Perez; IBM 2004 Annual Report
Scientific Technology Revolution Cycles (Nominal Time 50-60 Years: Perez 2002, Hirooka, 2003)
Courtesy of John. P. Dismukes, U. Toledo 2005
Is modern technology revolution driven by model or luck, or spirit ?
Life Cycle of a Technological Revolution
Courtesy of Carlota Perez 2002
Phase One Phase Two Phase Three Phase Four
Gestationperiod
Big-bang
Paradigm configuration
Introduction of successive new products, industries and technology systems, plus modernization of existing ones
Early new products andindustries.Explosive growthand fast innovation
Full constellation (new industries, technology systemsAnd infrastructures)
Full expansion of innovation and market potential
Last new productsand industries. Earlier ones approachingmaturity and marketsaturation
Constriction of potential
Around half a century
Two Different Periods in Each Great Surge
Courtesy of Carlota Perez 2002
Big-bang
-- INSTALLATION PERIOD
Next Big-bang
-- DEPLOYMENT PERIODTurning point
MATURITYSocio-political splitLast products and industriesMarket saturation and technological maturitiesof main industriesDisappointment vs. complacency
FRENZYFinancial bubble timeIntensive investment in the revolutionDecoupling of the whole systemPolarization of rich and poorGilded Age
SYNERGYGolden AgeCoherent growth withIncreasing externitiesProduction and employment
IRRUPTIONTechno-economic splitIrruption of the technological revolutionDecline of old industriesUnemployment
Recurring Phases of Each Great Surge in the Core Countries
Courtesy of Carlota Perez 2002 Big-bang
--------INSTALLATION PERIOD
Next Big-bang
-- DEPLOYMENT PERIODTurning point
CrashInstitutionalrecomposition
Previous Great surge
The Irruption Phase:A Time for Technology
• It begins with the big-bang of the technological revolution amidst a world threatened with stagnation, as in Britain in the 1830s and 1870s or the USA in the 1970s.
• This period is marked by increasing unemployment stemming from various sources, ranging from economic stagnation, through rationalization efforts, to technological replacement. – The world seems to be falling apart and the old behaviors and polices are impotent to save it.
• Meanwhile, the new entrepreneurs are gradually articulating the new ideas and successful behaviors into a new best-practice frontier that serves as the guiding model or techno-economic paradigm.
The Frenzy Phase:A Time for Finance
• A phase characterized by very strong centrifugal trends in society at large – a small but growing portion at the top is rich and getting richer while there is deterioration and growing outright poverty at the bottom
• A time of speculation, corruption and unashamed love of wealth – ‘The Gilded Age’ which appears of shinning prosperity and its socially insensitive inside of base metal
• Frenzy phase is also one of intense exploration of all the possibilities opened up by the technological revolution – though bold and diversified trial and error investment
• A phase of fierce ‘free’ free competition with tremendous excess money poured into the infrastructure (e.g. canal mania, railway mania, Internet mania), often leading to overinvestment that might not fulfill expectations – a sort of gambling economy with asset inflation in the stock market, looking like a miraculous multiplication of wealth so late Frenzy phase becomes “Financial Bubble time” Recession time
The Turning Point:Rethinking and Rerouting Development
• A process of contextual change to move the economy from a Frenzy mode, shaped by financial criteria, to a Synergy mode, solidly based on growing production capabilities– e.g. Bretton Woods meetings, enabling the orderly international Deployment
of the fourth surge– e.g. The repeal of the Corn Laws in Britain, facilitating the Synergy of the
second• The turning point has to do with the balance between individual and
social interests within capitalism – it is the swing of the pendulum from the extreme individualism of Frenzy to giving greater attention to collective well being, usually through the regulatory intervention of the state and civil societies
• The unsustainable structural tensions that build up the economy and society, especially during Frenzy, must be overcome by a recomposition of the conditions for growth and development
The Synergy Phase:A Time for Production
• Synergy is the early half of the deployment period. This phase can be the true ‘Golden Age’– e.g. Victorian England after the Great exhibition– e.g. America after the Second World War
• A mode of growth based on social cohesiveness, moral principles are in force, ideas of confidence flourish and business is satisfied about its positive social role – it’s a time of advance in labor laws and other measures for social protection of the weak, a time for income redistribution in one form or another, leading to enlarged consumption markets. It’s above all the reign of the ‘middle class’. Fast and easy millionaires are rare, though investment and work lead to persistent accumulation of wealth. “ Production is the key word in this phase”
The Maturity Phase:A Time for Questioning Complacency
• All the signs of prosperity and success are still around. Those who reaped the full benefits of the ‘golden age’ continue to hold on to their belief in the virtues of the system and to proclaim eternal and unstoppable progress, in a complacent blindness, which could be called the ‘Great Society Syndrome’
• Markets are saturating and technologies maturing, therefore profits begin to feel the productivity constriction, leads to concentration through mergers or acquisitions, as well as export drives and migration of activities to less-saturated markets abroad
Approximate Timeline of Each Great Surge of Development
(1770s and early 1980s)
(late 1780s and early 1790)
1793-97
1848-50
1893-95
Europe1929-33
USA1929-43
2001-?
(1798-1812) (1813-1829)
(1850-1857) (1857-1873)
(1830s)
(1840s)
(1875-1884)
(1884-1893)
(1895-1907)(1908-1918)
(1908-1920) (1920-1929) (1943-1959) (1960-1974)
(1971-1987) (1987-2001)
Geographic Outspreading of Technologies as They Mature (USA case)
Phase I Phase II Phase III Phase IV Phase V
All production in USA
Production started in Europe
Europe exports to LDCs
Europe exports to USA
LDCs exports to USA
US Exports to many countries
US Exports mostly to LDCs
US Exports to LDCs displaced
Net exporter
Net importer
New products Mature products
Time
LDC: less developed country
Mass-Production Paradigm and Information Revolution
• 1950s was a period of expansion in the USA, which served to pull the front-running European countries
• By the 1960s the main dynamism moved towards Europe and Asia, producing the so-called ‘miracles’ in Germany, Italy and Japan
• In the 1970s, it was Brazil, Taiwan and Korea that had taken over the baton
• After the mid-1970s, some of the oil countries were able to attempt growth using the mature energy-intensive technologies in aluminum, petrochemicals and so on. But by then, the information revolution was already taking force in the USA and other core countries and the organizational revolution was catapulting Japan to the front ranks while the stagflation of the irruption phase was entering he scene of the old advanced countries.
Definition of Financial Capital and Production Capital
• Financial capital (paper wealth/economy)– Represents criteria and behavior of possessing wealth in the form of money or
other paper assets – to use money to make more money by receiving interest, dividends or capital gains
– Tools: deposits, stocks, bonds, oil futures, derivatives, diamonds or whatever– Services: banks, brokers and other intermediaries who provide information to
make paper wealth growth– Mobile and footloose in nature– Flee from danger but enable the rise of the new entrepreneurs
• Production capital (real wealth/economy)– Generate new wealth by producing goods or performing services (including
transport, trade and other enabling activities)– Typical with borrowed money from financial capital or use their own money– Purpose of production capital is to produce in order to be able to produce more –
objective is to accumulate greater and greater profit-making capacity– Tied to concrete products, and knowledge about product, process and markets is
the very foundation to potential success– Roots in an area of competence and even in a geographic region– Has to face every storm by holding fast, ducking down or innovating its way
forward or sideways – but when it comes to radical changes, incumbent production capital can become conservative
FRENZYDecoupling FK-PK
Bubble economyDivorce between paper and real valueAsset inflation
IRRUPTIONLove affair of FK with revolution
Financial RevolutionIntense funding of the new technologiesDisdain of old assets
Recurring sequence in the relationship between financial capital (FK) and production capital (PK)
Courtesy of Carlota Perez 2002 Big-bang
--------INSTALLATION PERIOD
Next Big-bang
-- DEPLOYMENT PERIODTurning point
CrashInstitutionalrecomposition
Previous Great surge
MATURITYSigns of Separation
Financial capitalsearching on its own Decreasing investment opportunitiesIdle money moving to new area, sectors and regions
Next Great Surge
SYNERGYRecoupling FK-PK
Production capital at the helmRecoupling of real and paper wealthCoherent growth
Financial and Social Impact by Technology Revolution
• National market in the Victorian boom, from the mid-nineteenth century after the 2nd. technology revolution: That prosperity was brought about on the basis of a whole set of new institutions that ordered national markets and regulated the national banking and financial worlds, which facilitated the continued expansion of the railway system and the network of steam-powered factories in the growing industrial cities.
• International markets arisen, two decades after the big-bang of Age of Steel, required worldwide regulation (from the general acceptance of the London-based Gold Standard to universal agreements on measurement, patents, insurance, transport, communications and shipping practices), which the structural changes in production, including the growth of important science-related industries had to be facilitated by deep educational reforms and social legislation.
• Mass production and massive consumption, based on the mass-production technologies of the fourth paradigm had been diffusing since the 1910s and 1920s demanded institutions facilitating massive consumption, by the people or by the governments. Only is such a context could full flourishing be achieved.
• Cohesive growth based on the information revolution, would seem to require a global network of institutions, involving the supranational, national and local regulatory levels --- Globalization
Impact of War Expenditure
• War served to spread technology among the adversaries and thus create future peace-time competitors.– The massive war expenditures of the First and Second
World War came to rescue of investment opportunities and profits in the maturity phase of the third and fourth surge ,respectively, in the main advanced countries.
– Vietnam war plus the intensification of the Cold War and the Space Race, had a similar effect for the US economy during Maturity in the fourth surge.
Attributes of Past Revolutions • Each begins in a core country and later becomes dominant
both in economy and politics worldwide.• Each defines new/or redefines industries and
infrastructures.• Each generates new techno-economic paradigm
– New “common sense” innovation principles which define best competitive practices.
• Each takes 40-60 years going through Carlota Perez’s 3-stage model to spread across world:– Installation period (Irruption and Frenzy Bubble)
• Each generates technology bubble (massive over-investment) and later spearheads into financial panic and collapse.
– Turning point• Each turning point required collective vision.
– Deployment period (Golden Age (Synergy) and Maturity)• Each Golden Age has been facilitated by enabling regulation and
policies for shaping and widening markets.
Attributes of Past Revolutions • Resistance from established firms/institutions• Functional separation between financial capital and
production capital• Paradigm shift led by financial capital, which forms
bubble, which bursts, leading to hyper-adaptation (common-sense)
• Production capital then controls propagation• Huge surge is divided into two extremely different periods.
Installation period vs. Deployment period
The Historical Record: Bubble Prosperities, Recessions and Golden Ages
Courtesy of Carlota Perez 2008
Sources ofDEMAND
DIRECTIONALITY
Sources ofDEMANDVOLUME
THE ELEMENTS OF THE DEMAND OPPORTUNITY SPACE
Generic technologiesInfrastructures
EXTERNALITIES
Supplyopportunity spacefor INNOVATION
The coherence and synergy among the elements generates self-reinforcing loopsCourtesy of Carlota Perez 2010
Cold war
Welfare StateLabour unions
Public procurementCredit system
DEMANDVOLUME, PROFILE
AND TRENDS
SuburbanisationPost-war reconstruction
SPECIFICDEMANDAS DIRECTIONFOR INNOVATION
Cheap oil and materialsUniversal electricity
Road and airway network
The demand opportunity space that shaped the Post War Golden Age
INNOVATIONENABLERSFOR MASSPRODUCTION
The various elements were provided in different proportionsin each “First World” country
The currentopportunity spacefor a globalpositive-sum
CheapICT
game
FULL
Full internet accessat low cost is equivalent
to electrification andsuburbanisation
in facilitating demand(plus education)
“GREEN”
Revampingtransport, energy,products and production systemsto make them sustainableis equivalent topost-war reconstructionand suburbanisation
GLOBALDEVELOPMENT
Incorporatingsuccessive new millions
into sustainable consumption patternsis equivalent to the Welfare State
and government procurementin terms of demand creation
Courtesy of Carlota Perez 2010
The three forces defining the opportunity space are interdependent
There is enough space and potential to lift all boatsbut the markets cannot do it without the support of enabling policies
Only with sustainableproduction and consumption patterns
Is full globalisation possible
THE DIRECTION THE VOLUME
THE FACILITATOR
ICTs are the mainenabling instruments
of sustainability
“GREEN”
Internet access isthe social, economic
and geographicfrontier of the global market
FULLGLOBAL
DEVELOPMENT
ICTInformation and communications
technologies
Courtesy of Carlota Perez 2010
Each style became “the good life” that shaped people's desires and valuesand guided innovation trajectories
Each technological revolution has led to a change in consumption patternswith new life-shaping goods and services at „affordable prices‟
2010s-20??s Will the developed and emerging countriesdevelop a variety of ICT-intensive
“GLOCAL” SUSTAINABLE LIFESTYLES ???
DEPLOYMENTPERIOD
1850s-1860s
1890s-1910s
1950s-1960s
LIFESTYLE
Urban industry-aidedVICTORIAN LIVING in Britain
Urban cosmopolitan lifestyle ofTHE BELLE EPOQUE in Europe
Suburban energy-intensiveAMERICAN WAY OF LIFE
Courtesy of Carlota Perez 2010
Carlota PerezCambridge, LSE and Sussex Universities, U.K.Tallinn University of Technology, Estonia
9TH Triple Helix ConferenceStanford, July 2011
The direction of innovation
after the financial collapse
ICT for green growth
and global development
Technology Institutions
Perhaps the most important lesson that Chris Freeman taught us is:
THAT ECONOMICS IS INCAPABLE OF UNDERSTANDING GROWTH
WITHOUT INTERDISCIPLINARITY
Economics
HISTORY
That wider framework helps us identify long-term regularities
ANDALLOWS US TO GLEAN POSSIBLE FUTURES
FIVE TECHNOLOGICAL REVOLUTIONS IN 240 YEARS
The ‘Industrial Revolution’(machines, factories and canals)
Age of Steam, Coal, Iron and Railways
Age of Steel and Heavy Engineering (electrical, chemical, civil, naval)
Age of theAutomobile, Oil, Petrochemicals and Mass Production
Age of InformationTechnology and Telecommunications
Age of Biotech, Nanotech, Bioelectronics and New Materials?
1771
1829
1875
1908
1971
20??
EACH ONE DRIVES AGREAT SURGE OF DEVELOPMENTAND CHANGES THE TECHNO-ECONOMIC PARADIGM GUIDING INNOVATION
The second half is theDEPLOYMENT PERIOD
led by production aided by the Statewhen innovation
spreads across the boardto reap the full
economic and social benefits
The first half is theINSTALLATION PERIOD
led by finance and free marketswhen innovation concentratesto set up the new infrastructure,
to let markets pick the new winnersand to modernize the old economy
THE MAJOR BUBBLE COLLAPSEMARKS THE SWING OF THE PENDULUM
Due to the massive “creative destruction” requiredDIFFUSION TAKES PLACE IN TWO DISTINCT PERIODS
The shift from financial mania and collapse to Golden Ages occurswhen enabled by regulation and policies to shape and widen markets
THE HISTORICAL RECORDBubble prosperities, recessions and golden ages
Infrastructure bubblesof first globalisation
(Argentina, Australia, USA)
Belle Époque (Europe)“Progressive Era” (USA)1890–95
The roaringtwenties
Internet maniaand financial casino
Post-warGolden age
Global Sustainable”Golden Age”?
Europe1929–33
USA1929–43
2000 &2007/8-????
INSTALLATION PERIOD
Bubble prosperity
Canal mania
Railway mania
DEPLOYMENT PERIOD
“Golden Age” prosperity Maturity
The GreatBritish leap
The VictorianBoom
TURNINGPOINT
Collapse &Recessions
1793–97
1848–50
1908USA
1971USA
31875
rdBritain / USAGermany
4th
5th
GREATSURGE
1st
2nd
Yearcountry
1771Britain
1829Britain
WHY TWO PERIODS? WHY THE BUBBLE?
RESISTANCETO THE NEW
UNCERTAINTY
NATURE OFINFRASTRUCTURES
Old industriesold habits
old methods
Which products?Which technologies?Which companies?Which markets?
All or nothingInvest up-front
Revenues come later
Need a period ofCREATIVE DESTRUCTIONto force modernization
Need to experimentin ferocious “free market”COMPETITION
Need credit creationthrough bubble boom andshort-term CAPITAL GAINS
Once the bubbles collapse, the job is done
THE NEW PARADIGM IS INSTALLED AND CAN BE DEPLOYED
But that requires a structural shift away from the casino economy
?
HOW WASTHE MASS PRODUCTION
GOLDENAGE
UNLEASHED?
• Through very strict financial regulation in each countryGlass Steagall, “Chinese walls”, deposit insurance, capital export controls, etc.
• International stability through the Bretton Woods agreementsUS dollar as “gold”, IMF, GATT, World Bank (then IBRD), etc.
• Keynesian policies for stable growth within national bordersCounter-cyclical measures, stimulus spending, etc. and a set of policies…
…INDUCING STRUCTURAL CHANGE IN FAVOR OF MASS CONSUMPTION!
THE SYNERGISTIC CONDITIONS THAT SHAPED THE POST WAR GOLDENAGE
Cheap oiland materials
UniversalelectricityRoad and airway
networks
They were provided in different proportions in each “First World” country
INNOVATION ENABLERSFOR MASS PRODUCTION
FORCES SHAPINGTHE DIRECTION
OF INNOVATION
SuburbanizationPost-war
reconstructionR&D fundingCold war
FACILITATORSOF DEMAND GROWTH
FOR MASSCONSUMPTION
Welfare StatePublic procurementLabour unionsPersonal credit
system
A POSITIVE-SUM GAME
AND BROUGHTTHE GREATEST BOOMIN HISTORY
THAT TURNED WORKERSINTO MIDDLE INCOMECONSUMERS
Cheap Asian labor and the return of cheap oilhave hindered the use of this huge opportunity space
FROM THE LOGICOF CHEAP ENERGY (oil)for transport, electricity,synthetic materials, etc.
Preferencefor tangible productsand disposability
Unthinking useof energy and materials
Unavoidableenvironmental destruction
TO THE LOGICOF CHEAP INFORMATION
its processing, transmissionand productive use
Preferencefor services
and intangible value
Huge potential for savingsin energy and materials
Capacity forenvironmental friendliness
THE NEW TECHNOLOGICAL POTENTIALAMAJOR TECHNO-ECONOMIC PARADIGM SHIFT
A change in relative cost structures changes the direction of innovation
The new globalpositive-sumgame
UniversalICT
Full internet accessat low cost
is equivalentto electrification
and suburbanizationin facilitating demand
(and, this time,also education)
FULLGLOBAL
DEVELOPMENT
Incorporatingsuccessive new millions
into sustainableconsumption patterns
is equivalent to the Welfare Stateand government procurementin terms of demand creation
“GREEN”GROWTH
Revampingtransport, energy, products,production and consumption patternsto make them sustainableis equivalent topost-war reconstructionand the spread of suburbia
And the elements are interconnected
ICT
Internet access isthe socialand geographic frontierof the global market
FULLGLOBAL
ICTs are the mainenabling instrumentsof sustainability
“GREEN”DEVELOPMENT
Only with sustainableproduction and consumption patterns
Is globalization possible
But we need policy consensusinvolving government, business and society
“GREEN” is not only aboutsaving the planet
It is about saving the economyand having a high (but different)quality of life
GLOBAL DEVELOPMENTis not onlya humanitarian goalIt is about healthy growth,markets and employmentin the advanced, emerging anddeveloping worlds
But it cannot happen by guilt or fearbut by desire and aspiration
“GREEN” MUST BECOME THE “LUXURY LIFE”
WHAT LOOKS IMPOSSIBLE NOW MAY SEEM OBVIOUS LATERBut later it was obvious that…
Shifts in consumption patterns shift profit-making opportunities
it seemed impossible to imagine…
…that blue collar workerswould have lifetime jobs andfully equipped suburban houseswith a car at the door
…or that most colonieswould gain independence
And it seemed impossible in the late 1960s…
…to expect some of the valuesof the hippie movement[back to natural materials,organic food, etc.]to becomethe luxury norms
…increasing wages createdmany more millions of consumersfor mass production and sustained growth
…the new middle classesrising in the developing worldwidened world markets for mass productionby adopting the “American Way of Life”
But now it is obvious that…
…innovations in natural textile fibershave transformed the world of high fashion
… and innovations in distribution logisticshave made organic foodsthe premium segment in supermarkets
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