Technological Revolutions and Financial Capital presents a novel interpretation of the good and bad times in the economy, taking a long-term perspective and linking technology and finance in an original and convincing way. Carlota Perez draws upon Schumpeter's theories of the clustering of innovations to explain why each technological revolution gives rise to a paradigm shift and a New Economy and how these opportunity explosions, focused on specific industries, also lead to the recurrence of financial bubbles and crises. These findings are illustrated with examples from the past two centuries: the industrial revolution, the age of steam and railways, the age of steel and electricity, the emergence of mass production and automobiles, and the current information revolution/knowledge society.
Carlotas' framework's main contribution is to link the role of financial capital in the instalment of important 'general-purpose' technological innovations and infrastructure as well as the role of the state in diffusing and redistributing the productivity gains for the benefit of all. Unique to her concept is also the integration of the role of financial crises in transitioning from a finance-driven period to a production-driven period and the importance of the state and regulation to achieve this transition.
Comment from our editors:
I have had the opportunity to be a student of Carlota Perez at my MA programme Technology Governance & Digital Transformation at Tallinn University of Technology. As a friend of open-source, she made her book digitally freely available for all her students.