PODCAST: “COVID1-19 may have been unexpected, but we had a financial crisis coming our way anyhow”

Carlota Perez is a Venezuelan-British researcher, author, lecturer and international consultant, specialized in the social and economic impact of technical change. Her bestseller “Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages” is one of the most popular and referred to works about the relations between technical and institutional change, finance and technological diffusion and technology and economic development. John Hagel, Azeem Azhar, Fred Wilson, Peter Hinssen and Steven Van Belleghem are just a few of her well-known fans.

Carlota is one of the most brilliant people I ever had the chance to interview for the nexxworks Innovation Talks podcast, and also one of the kindest. Do yourself a favour, and listen to the full interview here:

If you need any more incentive, here are some brief highlights of what we talked about (I’m not giving you any more than this, because you really ought to listen to her explain this, sorry):

• Though the current pandemic may be unexpected, the crisis that it has triggered is not. Carlota explains that the current stock market was in an absurd situation, growing 200%, while the economy only grew 10% to 12% in the same period. Add to that the fact that global debt is enormous and you’ll realize we definitely had a financial crisis coming our way, COVID-19 or not.
• The coming COVID-19 crisis will be extrememely brutal, because it goes beyond a financial crisis (like the one of 2008): it is an economic, an employment and a health crisis and it has revealed the highly fragile situation of the gig economy and other precarious workers.
• In our current technological revolution - the fifth - we have arrived at the turning point of our era (see the illustration below), which is characteristically a highly difficult and unstable period (unemployment, recession, populism, anger etc.). But it also means that we are on the verge of a new golden age. Carlota believes that this next golden age might be driven by the opportunities that lie in the immense problems that the former, fourth technological revolution (of oil, cars, plastics and mass production) has caused. This might result in the golden age of smart green growth, according to her.
• Before we get to that next golden age, governments will need to change the context in a clear direction through some bold policy changes to incentivize the following:

1. Investing in the long term through, for instance, a changed tax approach
2. Innovating in less and smarter use of energy, materials and transport
3. Switching from products to services, and from possession to rental
4. Providing a humane safety net with affordable healthcare and education, and possibly a Universal Basic Income

• Every technological revolution creates giants and monopolies. In the fourth, these were the enormous oil, automobile, pharmaceutical and telco companies like AT&T and Standard Oil. In this one, it’s the Facebooks and Googles. Carlota believes that it is the role of the government to make sure that they do not abuse their power.
• One of the biggest obstacles towards the next golden age is the glass ceiling for young people, as humans now live and therefore stay in power much longer. So, it’s really important that we empower the younger generations – that were born in the current paradigm (not the former) – to shape our future in accordance with the ‘rules’ of this paradigm.

One last thing. To help you visualize the different technological revolutions Carlota talks about, and how they are structured, here is a very clear chart:

But again, I insist, please do listen to Carlota explain this herself here.