Are We on the Verge of a New Golden Age?

"Each of these surges follows the same broad pattern. First, there is a wave of major new technologies, leading to dramatic changes in industrial production and daily life. For about 20 to 30 years, in a period that Perez calls installation, these technologies are funded largely by speculative investment chasing rapid returns. This age of widening wealth disparity leads to a bubble, which bursts in spectacular fashion, and is followed by a crisis period that Perez calls the turning point. This phase of economic and social turbulence has varied in length from two years to 17. Many efforts to get back to normal are made, usually involving the regulation of financial excesses or the stimulation of production and employment. When the crisis ends, the third part of the cycle begins; it consists of 30 years or so of stable economic growth, with a high level of genuine return on investment, and an economy funded by production capital, not speculation. Perez calls this period deployment. It is experienced as a golden age: a wave of prosperity, lifting everyone’s fortunes, including those who felt left behind just a few years before. Eventually, the technological opportunities reach exhaustion, markets become saturated, and the cycle starts all over again (see Exhibit 2)."


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