Bubbles and Golden Ages

Part II of History and Progress Series

Greetings Colligoans,

Here is the second in a two-part series on history and progress. In the piece below, I look more closely at cycles in business, which business theorists have recognized and studied for decades, but which play almost no role in the tech-futurist’s view of progress. The latter’s idea, that of constant accumulating growth driven by advances in technology, is a chimera. It’s also potentially limiting and dangerous, as it fixates on one factor—technology, and in particular digital technology or “bits, not atoms”—without taking into account larger embedded systems, where “progress” involves recognizing bottlenecks and wrestling with aspects of the physical world that may be immune to automation or AI (the application of “AI” can actually slow innovation). Progress that we care about—economic productivity, say—is notoriously multifaceted, so sanguine bromides like head of OpenAI Sam Altman’s Moore’s Law for Everything are risibly fictitious. The real world just doesn’t work that way.

Recall also that the point of Colligo is to reject a limited data-centric view of the world and move toward a more holistic and humanistic worldview. This is a tall order, clearly, but part of the challenge is simply to identify flat, linear thinking that masquerades as scientific truth and knowledge. Tech-futurists are particularly prone to such thinking. They seem also to perpetually enjoy a largely compliant media and public, and so their anti-humanist—or just incorrect—views tend to go unchallenged. I’m certainly not suggesting that technologists or even technocrats are inherently myopic, but tech-centric views of progress are, and they have to be corrected by those with other tools and different perspectives. Ugh. Okaaaay.

I hope you enjoy this piece on cycles, not Moore’s Law rocket ships to the future. (Yes, I have to harp more on cycles in history, but it’s foundational to the entire project to see them and to appreciate the large role they play in our economy, culture, and way of life.)

Thanks again to everyone taking this journey with me. It is much appreciated.

Erik J. Larson

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View history through the right lens, and we’re always stuck in the past. As business theorists have long understood, technological revolutions don’t lead “onward and upward” like a juggernaut, they pass through stages, a series of ups and downs. Technological innovations peter out. Markets crash. Hopes are lost. After a Golden Age where potential seems unbounded, resources and ideas get exhausted, and political instability and social unrest follow (when, for instance, inflation sets in). Carlotta Perez, in her now famous Technological Revolutions and Financial Capital, The Dynamics of Bubbles and Golden Ages, sequenced the typical stages this way: technological revolution-financial bubble-collapse-golden age-political unrest. Perez says this business cycle—a feature of the casual mechanisms of capitalism—occurs roughly every half century and started with the first water-powered cotton spinning mill in 1771, which kicked off the Industrial Revolution. Tim Wu, in his history of communications, argued in a similar vein that each new information technology follows what he called “The Cycle”: “…from somebody’s hobby to somebody’s industry; from jury-rigged contraption to slick production marvel; from a freely accessible channel to one strictly controlled by a single corporation or cartel — from open to closed system.”

         

Techno-futurists who tout exponential progress see digital technology as the final technological revolution. If theorists like Perez or Wu are right, this is a profound mistake, a failure to grasp the dynamic nature of capitalism. We have evidence of cycles of business spurred by initial inventions or innovations. We don’t have evidence of final solutions.

Perez dated our current era back to 1971, when Intel released the first microprocessor—the “computer on a chip.” She dubbed it The Age of Information and Telecommunication. When her book came out in 2002, “AI” was still a wild card. Today it seems to epitomize the entire information and telecommunications era. Techno-futurists who trumpet theories of exponential change bet that AI technology will eventually take over the world. It’s somehow the last revolution. Documentary film maker James Barrat captured the spirit of the times nicely with his 2013 book, Our Final Invention: Artificial Intelligence and the End of the Human Era. In other words, we can be sure we’re making exponential progress because our technological revolutions are behind us. The future is what we see around us, only better (cue a loud yawn).

The details of business innovation theories are not necessarily important in themselves, as they represent much smaller cycles driven, as Perez puts it, by particular “techno-economic paradigms” within capitalist economies. They are in effect miniscule spirals in the much larger, epochal cycles of entire ways of life, entire nation-states. They sit squarely within Vico’s cyclical theory.

 It's clear however that the starting date of 1971 for our current tech revolution—a very reasonable starting point, by any account—puts us at the very end of Perez’s half-century life span. It puts the Golden Age behind us. This is already an embarrassment to techno-futurists, who insist that the Golden Age is perpetually in front of us. Their position seems Panglossian, and as Perez has pointed out, early ages of “steam and railways,” “steel, electricity, and heavy engineering,” “oil, automobiles, and mass production” all had boosters making similar end-of-history claims. Are techno-futurists aware they keep making the same mistake?

Given Vico’s broader lens, we may be initiating a return to sometime before the Enlightenment—a gargantuan cycle which would no doubt have seismic consequences for the western world and indeed everyone on earth. At minimum, though, we seem to be at the end of a tech revolution, not the beginning. If this is true, the world is likely to continue to surprise us, and we’re likely to wander whistling into traps—like wars, social unrest, and financial collapses—, until our core views better reflect reality. In my next post I’ll turn back to LLMs and ChatGPT, and look at this latest tech in the bigger picture of business and the economy.