He is an economist who, from the height of his 82 years, is a model in Silicon Valley. The reason for Carlota Perez’s success? This Venezuelan academic has theorized the existence of cycles of innovation that have only followed one another for 250 years and each time influence the whole world. Drawing on the work of Nicolai Kondratiev on economic cycles and that of Joseph Schumpeter, a thinker of creative destruction, this Honorary Professor at the Institute for innovation and public purpose at University College London shows the recurrence of systemic innovation movements. According to her, they always evolve in two phases separated by a rupture: the installation, first, synonymous with economic and social disorders. These bubblings cause crises following which the stages of deployment begin, golden ages during which the public authorities regain control of innovation so that it benefits the majority of the population.
In this, Carlota Perez is a thinker of hope. For her, the current information revolution is only at its first stage. Ultimately, the economist predicts that the current revolution will lead to an era in which the economy will be digital, green, fair and truly global (which would benefit all regions of the globe). That said, like the cycles that have seen the development of metal and rails, electricity or oil and plastic, this will not be without pitfalls.
Donald Trump elected in the United States, Brexit, France which elects more far-right deputies than ever… What role does technological development play in these political issues?
The first decades of the spread of a technological revolution are periods of “creative destruction,” as Schumpeter described it. Job skills and industries are being wiped out while new ones are springing up. New millionaires appear at the same time as the lives of millions of people decline. With their hopes shattered and the fear that their children will have worse lives than theirs, resentment grows. This leads to rebellions and is fertile ground for messianic leaders and populists of both extremes. It happened every time. Hitler has been elected!
Isn’t that the exact opposite of where the markets should go, according to your model?
It is precisely because of rebellions and the collapse of traditional parties that, at some point, leaders emerge who understand the need to create a positive-sum game between business and society. It is these movements that put in place the social protection measures, these proactive governments that guide the technological revolution. When Hitler was preparing for war, Roosevelt was already pushing companies to accept fairer working conditions and pushing for home ownership. It was these policies that enabled the post-war boom. This type of orientation is recurrent: social progress and golden ages come after periods of increased inequality and prosperity for a minority. Maybe capitalism will find ways to lessen the pain, but, so far, each of these reversals has been and is painful.
Your theoretical model is sometimes used in the blockchain world. What do you think of innovations such as Web3, which aims to be radical, but is based on a technology and a financial system in which trust is very volatile?
I argue that there is a difference between a technological revolution (the subject of my work) and a revolutionary technology (blockchain or AI, for example), but once you publish a theory, it is no longer yours . People in the crypto world continue to use my model, but the libertarian ideal of getting rid of central banks and the state is exactly opposite to what the golden ages are. The latter are socio-institutional revolutions that involve the redesign of proactive government, with systemic policies to guide the technological revolution in a society-friendly direction. It is not about preserving existing policies or computerizing old bureaucratic methods. This is a major reinvention of a smart and strong state, not its elimination. In that sense, I think both crypto-libertarians and free-market fundamentalists go against history.
In a more digital society, many of today’s jobs will be automated. Yet the idea of a universal income remains controversial. What is your point of view on this debate? How could it benefit the globalized world?
Universal Basic Income (UBI) must be separated from global development, just as developed countries have established welfare states that poorer countries have not been able to afford. It is likely that the basic income will not be universal in the developing world, but reserved for those who need it most, such as the program Bolsa Familia in Brazil, which pays allowances to the poorest families on the condition that the children attend school. This targeting is carried out for reasons of financial accessibility and organizational capacities. In the advanced world, UBI is part of the necessary socio-institutional transformation. Freelance work, fixed-term contracts and services like Uber are proliferating, while robotics, artificial intelligence and other technologies that increase productivity and reduce jobs are spreading. Trying to stop them through regulation would result in a bureaucratic nightmare. By providing every citizen with a basic income – enough to eat, travel and house at a minimum – we would create a protection under which no one would fall.
How could such a measure work?
I imagine a system with automatic payments on personal cards, then beyond a certain income, the sum would be reimbursed by tax brackets. This would allow the system to operate without bureaucracy, targeting the needy, but also paying housewives for their unpaid work, allowing young people to pursue their dreams, preventing the elderly from falling into poverty… Nobody would need to accept any job to survive or remain in an abusive couple for lack of independent income: one would use enabling technology to provide basic justice. The idea that this would create a lazy society is rooted in the humiliation and lack of dignity associated with welfare today. But no basic income experiment has proven that people work less when they are treated like respectable citizens.
You believe that this information revolution should make it possible to create a greener and more sustainable world. Yet the mainstream media struggles to broach the subject head oneven in times of heat wave, and prefer to deal with rockets that go into space and the miracles of artificial intelligence than with their ecological cost. The financial system also seems uninterested in the fight against climate change. What escapes us?
In capitalism, the motive for investment is profit, so the only way to start the ecological transition is to change the structure of the economy. Investing in green projects should be made more profitable than pursuing carbon-intensive production methods. We need to move from products to services, from owning to renting… Only governments can do this, through systemic policies reshaping tax and regulatory systems.
We may need to change the VAT from its current nature as a tax on wages and profits to a tax on energy, transport and materials. Long-term investment could be encouraged by a high, time-decreasing tax on capital gains. Public investment in large “missions”, with the participation of the private sector, is another important instrument. We need imaginative and determined leaders. Moreover, trying to get people to change their way of life through guilt or fear is a losing game. Green lifestyles must inspire aspirations. We need to redefine what a “good life” is, into something very different fromAmerican Way of Lifewhich, if it allowed the Trente Glorieuses, wastes and consumes a lot of energy and materials.
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“Crypto-libertarians go against history”
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