"Technological revolutions, paradigm shifts and socio-institutional change"

2004. “Technological revolutions, paradigm shifts and socio-institutional change” in E.Reinert, ed. Globalization, Economic Development and Inequality: An alternative Perspective. Cheltenham: Edward Elgar, pp. 217-242.  ISBN: 1 85898 891 8

1998. Based on the original German, "Neue Technologien und sozio-institutioneller Wandel", in H. THOMAS and L. NEFIODOW (Eds.), Kondratieffs Zyklen der Wirtschaft, BusseSeewald. Herford, Germany pp.17-51. ISBN : 3-512-03177-3  

Download: TRs_TEP_shifts_and_SIF_ch.pdf (83.9kb)

Table of Contents:

1. Understanding technology and its mode of evolution
1. Inventions, innovations and diffusion
2. Incremental and radical innovations
3. Birth, development and stagnation of a technology
4. Technological systems as paths for radical innovations
5. Self-reinforced processes of growth and exhaustion
6. Technological revolutions as rejuvenation of all systems
2. Techno-economic paradigms as common sense models transforming the productive sphere
1. A cheap input as vehicle of diffusion
2. Diffusion is self-reinforced
3. A new paradigm as a quantum jump in potential productivity for all
4. A techno-economic paradigm as an overarching logic for the technology systems of a period
5. Difficult assimilation: the shaping of a paradigm takes decades
3. Structural change in the economy and socio-institutional inertia
1. Institutional inertia: the upswing delayed
2. The example of the previous socio-institutional framework
3. Long waves as coupling and decoupling of the system
4. techno-organisational paradigms as guidelines for change in the socio-institutional sphere
1. The wide space of the possible
2. The notion of a paradigm can be understood on three levels
3. General principles: many forms of application
4.The politics of transition


The last decades of the 20th Century were a time of uncertainty and extremely uneven development. People in many countries and in most walks of life feel uncertain about the future for themselves and their workplaces, about the prospects for their own countries and for the world as a whole. Inside each country and between countries there were strong centrifugal trends generating unprecedented growth and wealth, at one end, and increasing poverty deterioration and degradation, at the other. Among those old enough to remember, there was widespread recognition that the erratic, uneven and unstable climate of the 1980's and 1990's was profoundly different from the "Golden Age" of growth of the 1950's and 1960's. This recognition is probably at the root of the revival of interest in long waves.

This chapter puts forth a particular interpretation of the long wave phenomenon, which offers to provide criteria for guiding social creativity in times such as the present. Basically, the present period is defined as one of transition between two distinct technological styles -or techno-economic paradigms- and at the same time as the period of construction of a new mode of growth. Such construction would imply a process of deep, though gradual, change in ideas, behaviours, organizations and institutions, strongly related to the nature of the wave of technical change involved.

Indeed, contrary to what is usually assumed, we suggest that long waves are not merely an economic phenomenon, though they certainly have economic manifestations. Long waves would affect the whole system, the entire structure of society, worldwide. This would explain why economists have such a difficult time proving or disproving the existence of long waves, while historical memory and the people of each period clearly distinguish the "good times" from the "bad times." In fact we will argue that the instability of the present period has a techno-economic origin and a socio-institutional solution.

According to our interpretation, the long term fluctuations that we call long waves would be the result of successive couplings and decouplings of two spheres of the system: the techno-economic, on the one hand, and the socio-institutional, on the other. When a good coupling is achieved between those two spheres, there is a long period of two or three decades of stable growth, perceived as times of prosperity. When a decoupling occurs, it results in equally long periods of irregular growth, recessions and depressions, perceived as bad times. But, why should this mismatch come about and what is the nature of the recoupling?

The causes for this behaviour of the system would lie in important differences between the techno-economic and the socio-institutional spheres, in terms of rhythms and modes of change.

We suggest that there are mechanisms inherent to the way technologies diffuse which result in technological revolutions or changes of paradigm every fifty or sixty years. This results in long term patterns of continuity and discontinuity in the techno-economic sphere which require matching transformations at the socio-institutional level. Yet, there are inertial forces which make the socio-institutional framework more resistant to change and rather slow to adapt to new conditions, except under critical pressure. Thus the mismatch occurs with each technological revolution and it takes decades to reestablish the coherence of the total system. But, once the good match is achieved, a period of prosperity ensues, giving way to the full deployment of the new wealth creating potential.

If this is an acceptable explanation of the occurrence of long waves, the question remains as to what guides the adequacy of change in the institutional sphere. We suggest that each technological revolution, as it spreads, generates a set of best practice principles which serve as a conscious or unconscious paradigm for steering institutional change and for designing the social tools with which to master the new techno-economic potential.

Let us develop the argument beginning with the question of the great continuities and discontinuities in technology. For this, we must examine the manner in which technologies evolve. This will be the content of the first part. Then, in the second part, we will see how and why technological revolutions gradually transform the whole productive system. In the third part: we discuss how the matching changes in the socio-institutional framework take time to occur. Finally, in the fourth part, we present the way in which an understanding of the nature and characteristics of the emerging technologies can help in designing appropriate responses at the institutional level.



Published 2002

'...the book fills an important gap in the literature on business cycles and innovations. I most strongly commend it to all those attempting to understand the past and future evolution of technology and the economy.'

Christopher Freeman, Emeritus Professor, SPRU,
University of Sussex, UK

'...Carlota Perez shows us that historically technological revolutions arrive with remarkable regularity, and that economies react to them in predictable phases. Her argument provides much needed perspective not just on history, but on our own times. And especially on our own information revolution.'

W. Brian Arthur, Santa Fe Institute, New Mexico

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Technological Revolutions Financial bubbles Installation Period Frenzy Deployment Period Golden Ages Dual strategy Techno‑economic paradigms Neo‑Schumpeterian Respecialization Synergy Turning Point Future markets Knowledge society Green growth Maturity Full global development Globalization Sustainability Socio‑economic development Paradigm shifts Irruption Market hyper‑segmentation