Technology Waves and Economic Progress – Surviving the Techstorm

TECHNOLOGY
WAVES AND
ECONOMIC
PROGRESS

There is a significant correlation between a technology wave and economic progress. The model opposite is based on the notion that capitalist economies have long cycles of boom and bust, fuelled by technology and society’s progress during each wave. These cycles are typically 40-60 years long, and as previously stated, each wave goes through three phases related to technological development and acceptance.40

As we enter the sixth technology wave, using the first five technology waves as our guide, we can prepare better for inevitable events that correspond to changes in technology and society.

If you build a graph showing a rolling 10-year return of the US stock market for the past 200 years, you see a distinct correlation with four of the technological waves. You can also very clearly see the economy going through a number of crises. The “panic of 1837” was mainly caused by runaway prices of land, cotton and slaves. The crisis of 1873 was because of inflated values of railway shares and post-war financial turmoil. There followed the Great Depression in the 1930s, the oil crisis in the 1970s due to OPEC’s oil embargo, and the Lehman triggered stock market crash and financial crisis of 2008. It’s safe to say technology waves are more than just repeating patterns. They can, in fact, be used to understand the future of economy and society better. As we enter the sixth technology wave, using the first five technology waves as our guide, we can prepare better for inevitable events that correspond to changes in technology and society.