A few weeks ago I met with Carlota Perez in New York. I first met Carlota, - a friend so I will refer to her by first name, - around the time of the publication of her 2002 book: Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages. In her book, as well as her many articles and lectures, she frames the turbulent times we are going through into a clear, historical perspective. Let me briefly summarize her views.
Over the past couple of centuries, we have had a technology revolution every 40 - 60 years, starting with the Industrial Revolution in 1771, which was characterized by the emergence of machines, factories and canals. This was followed by the age of steam and coal, iron and railways which started in 1829; steel and heavy engineering (electrical, chemical, civil and naval) starting in 1875; and the age of the automobile in 1908. Our present information technology and telecommunications age, whose starting point Perez pegs at 1971, is the fifth such major revolution in that span.
Each such technology revolution is composed of two very different periods, each lasting 20 - 30 years. The installation period is the time of creative destruction, when new technologies emerge from the lab into the marketplace, entrepreneurs start many businesses based on these new technologies, and venture capitalists encourage experimentation with new business models and speculation in new money-making schemes.