“There comes a time in many industries when fundamental specifications are being revolutionized. When such a fundamental change occurs, a new era begins.” Since the work of American economist Simon Kuznets cited above in the 1930s, researchers with different approaches have shown that so-called “radical” technologies, such as the steam engine, electricity, or the computer, are the main source of long-term economic growth. development. In other words, they are the first vectors for the transformation of the economic system, both quantitatively (economic growth) and qualitatively (structural and institutional changes).
Indeed, according to these studies, radical technologies are at the heart of technological revolutions, that is, the “creative destruction process” that creates new industries and deeply affects existing industries, destroying some and renewing others. The sequence of technological revolutions over time, in turn, underlies long-term economic growth (dashed line on the graph) and its fluctuations, also called long waves of economic development (straight line on the graph). schedule).
Each wave represents an impact on the production of a technological revolution. On the graph, the waves have the same length and amplitude, but in reality this is usually not the case.
And now AI?
Three major technological revolutions are often identified in the literature: the first (circa 1770) based on the steam engine and the textile industry; the second (circa 1870) with electricity, internal combustion engine and chemistry; the third (circa 1970) is based on ICT (information and communication technology) such as semiconductors, computers, software, Internet, etc. Finally, according to some authors, artificial intelligence (AI) and other interdependent technologies (large data, Internet of Things, virtual reality, etc.) could be the next revolution.
What then are the factors that determine the emergence of technological revolutions and the direction of their change? Our research on this issue makes it possible to distinguish between factors endogenous to the economic system (that is, dependent on economic variables such as economic growth) and exogenous factors.
The main endogenous factor is related to the tendency of some economic actors to invest in radically new technologies when the dominant technologies no longer bring the expected increase in profits. For example, studies have shown that ICT productivity gains have been very small and have been declining since the early 2000s.
In addition, a number of exogenous factors affecting both the duration and the amplitude of long-term oscillations (waves) can have a great influence on the mentioned endogenous process. In other words, they can hasten or delay the emergence of a new revolution and, consequently, a new phase of economic development.
These exogenous factors may include random historical events (wars, epidemics, natural disasters, etc.), purely technical factors, and various socio-institutional actors such as governments, universities, financial institutions, associations, or social movements.
For example, scientific institutions (universities and research laboratories) are expanding the stock of scientific knowledge that serves as the basis for the development of new technologies. As for financial institutions, they are still important for financing new high-risk projects.
The weight of governments
More generally, all institutions—the education and training system, labor market institutions, the intellectual property system, political and cultural institutions—can speed up or slow down a new revolution, either by facilitating its spread and assimilation into society, or by acting as a deterrent to change.
Moreover, socio-institutional actors can influence the choice of technological paradigm and technological trajectories that characterize each revolution. They can indeed play a role through their consumer preferences and in articulating the technological and social needs to be met. For example, the emergence of the ICT revolution and its technological paradigm was greatly influenced by the US government’s need to miniaturize electronic components for military purposes during World War II and the Cold War.
Our analysis suggests that the slowdown in productivity seen since the 2000s may be a signal that the economic system needs to change its dominant technologies and that we are in a phase of technological fermentation that could lead to a new technological revolution.
However, our study also emphasizes that exogenous factors can have a very important influence both on the timing of a possible revolution and on its trajectories of technological and social change. Thus, factors related to how governments deal with the Covid-19 health crisis, or even the global environmental crisis and rising inequalities, may matter. Thus, the current phase may represent an important and rare opportunity for public policy and social-institutional actors to direct future development in the direction desired by society.
Therefore, we seem to need a serious and comprehensive policy debate to discuss which technological and social change trajectories should be prioritized and which should be neglected or set aside in order to focus investment in broad and effective lines of change. more equitable economic development.