I've been reading a book by Carlota Perez, an academic specialising in the social and economic impact of technological change (hat tip to my colleague Nick O'Connor on that front).
The book Technological Revolutions and Financial Capital was written in 2002 amid the dotcom bubble fallout.
It's all about how technological innovation is a cyclical thing. You get cycles of innovation and stagnation roughly every 50-60 years that end up moving us into new eras.
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So for example, we had the industrial revolution in the late 1700s, then the age of steam and railways. Most recently, we've had the information technology revolution.
Each transition period is accompanied by oddly-behaving financial markets and social and political upheaval. If Perez's model is right, it looks like we're not far off another epochal shift right now.
What could it be? I think I have an idea
How technological revolutions unfold
Perez's book outlines a model for thinking about how and why world-changing technological revolutions happen, and how each era unfolds over specific phases, from the "going mainstream" moment, through the bubble era "frenzy", to widespread adoption and finally stagnation before another breakthrough kicks things off again.
It's written in an academic style with copious use of words like "paradigm" and "socio-institutional". So it's not necessarily an immediately appealing read.
But if you're at all interested in the topic, it's worth making the effort. It's short, the underlying arguments are clear and well made, and it provides an awful lot of food for thought.
Perez's model talks through the five big changes that she reckons have happened in the last 250 years or so, starting with the industrial revolution.
Each lasts for (very roughly) 50 to 60 years. Currently we're at the tail end of the fifth technological revolution era the age of information technology which she suggests started in 1971 with the invention of the microprocessor.
For more detail you can check out the recent issue of MoneyWeek magazine(if you're not already a subscriber, sign up now).
By necessity, her model is a loose one. You're not going to be able to predict the next recession to the very date, as some long-cycle models promise (and inevitably fail to do).
But what her framework does is provides some very recognisable, repeating patterns that are helpful for thinking about how these things unfold.
For example, as one technology matures and starts to stagnate, that's often when you see the new one approach its mainstream moment. During this "irruption" phase, the advances of the previous revolution are running out of steam, sparking fears about economic stagnation. Yet at the same time, the new technology seems as much of a threat as a promise, creating concerns about the impact on employment.
These are times when "deep questions about the system are being asked in many quarters", notes Perez. As a result, you often get social and political upheaval. "Inside political parties, both left and right, a cleavage takes place between the modernisers and the nostalgic, sometimes leading to divisions, re-compositions or completely new movements."
Sound remotely familiar?
Get ready for the age of convenience
Anyway it's a good book. It provides a lot of useful context for where we are right now. And it's got me wondering about what the next big shift might be.
I'm tossing a few ideas about in my head, but one that keeps coming back to me is this idea that we're entering what you could describe as the "Age of Convenience".
The information technology revolution has transformed the way we communicate. Almost any industry or service that can be virtualised and transmitted digitally music, retail, publishing, broadcasting has been.
It's mostly on-demand (you get it now!), involves little or no human interaction, and no physical cash changes hands. It's all quick, clean and ultra-convenient.
Now, what if you could transfer that experience to the physical world? What if it wasn't just about communication and paperless offices and mobile payment solutions? What if every transaction in your life was like your digital transactions?
That might sound a bit abstract. So here's the biggest example I'm thinking of cars.
I don't know about you, but as far as I'm concerned, a driverless car would be a dream. I find driving a chore. And I don't think anyone enjoys being stuck in traffic jams.
So a car that does all that for you, and better still can communicate with all of its fellow cars, so that each follows the optimum route to avoid any congestion well, who wouldn't want that?
This is what I mean by shifting the convenience and the slick design of the digital world to the physical world. And it's happening faster than maybe you'd imagine.
Here's the story that really got me thinking about it. Something that many commentators including MoneyWeek have highlighted about self-driving cars is that the social and legal hurdles will probably be at least as much of a challenge to overcome as the technological obstacles.
Yet we've already seen Tesla quietly launch a self-driving mode for its electric cars. Sure, they tell the drivers to keep their eyes on the road and their hands on the wheel. But the reality is, at least some of those cars are making their own way up the motorway.
And in Singapore, a small start-up called nuTonomy has already put a test fleet of six electric driverless cars on the road, in a small area of the city.
But now Uber is pushing the issue further. The company which has come a long way from being a glorified taxi service has just unleashed a small fleet of self-driving cars in the US city of Pittsburgh. To start with, there will still be a human driver in the front seat, supervising. But it's the clearest indicator yet of the direction we're heading in.
As the FT notes, "Uber's decision to put its Pittsburgh passengers directly into self-driving cars, even with a back-up driver, will test US regulation of the vehicles an area where American policymakers have struggled to craft meaningful rules."
This social aspect is fascinating. Tech companies are simply battering through all the legal and societal grey areas that their existence has suddenly highlighted, and our institutions are going to struggle to catch up.
Uber, of course, has form on this. It has already caused controversy over everything from taxi regulation and licensing to employment law.
But it's not just Uber. We've already seen big changes in attitudes to privacy. Almost everyone who owns a smartphone or a computer with varying degrees of awareness has signed away big chunks of their personal data to businesses all around the world.
The main reason that this has happened so easily is that people mostly don't care because they'll sacrifice privacy for convenience any day. And I suspect that if someone can offer us friction-free, on-demand, safe, reliable taxi rides, just by pressing a button on our phones, then we'll figure out how to overcome the employment, legal and insurance industry issues that'll be thrown up along the way.
That's just the start. Wait until there's the household artificial intelligence (AI) that can order your shopping (same-day delivery by drone), optimise your thermostat and your electricity usage (you don't do that now because you can't be bothered with the hassle, but you'll happily let an AI do it), and stack and empty the dishwasher for you (OK, maybe I'm getting too utopian now).
Of course, throughout the build-up to and the adoption of this age of convenience, we will still have constant geopolitical problems and financial crises rumbling on, and we'll still be wildly discontented, and we'll still find stuff to worry about. But I guess we wouldn't be human otherwise.
Maybe that's a future improvement that someone's working on right now.
John is the executive editor of MoneyWeek and writes our daily investment email, Money Morning. John graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.
He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news. John joined MoneyWeek in 2005.
His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.
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