Forum: Tapping into the new techno-economic paradigm

Internet access could well be a 'human right', as minister says

Culture and Heritage Minister Judith Tizard’s view that access to the internet should be seen as a human right is not as far-fetched as it might sound. Tizard was commenting at the launch of Connecting the Clouds, a history of the internet in New Zealand.

Some modern-day economic theory, following the Czech economist Joseph Schumpeter, who created the term “creative destruction”, focuses on what are called techno-economic paradigms and the financial characteristics behind them.

At the forefront of this thinking is Carlotta Perez, of Cambridge University, who has written a long-term view of such financial and technical change.

The model is one of historically recurring phases in the diffusion of technological revolutions, through to their assimilation by the economic and social system to maturity.

Perez suggests that what distinguishes a technological revolution from an individual technology system is its all-pervasive character, its capacity to go beyond the industries it creates and to provide generic technologies that modernise the whole economic structure.

Historically, these revolutions have lasted around 50 years. Each becomes a standard only after overcoming the resistance of the preceeding model.

Perez lists the technological revolutions as: the industrial revolution, highlighted by the invention of the mechanised cotton industry, wrought iron and machinery, with associated infrastructure such as canals, waterways, turnpike roads, and water power; the second was the age of steam and railways; the third, the age of steel, electricity and heavy engineering; the fourth, the age of oil, the automobile and mass production; and the latest, from 1971, the age of information and telecommunications.

Finance is the driver. Decisions to invest are taken by entrepreneurs, often backed by financial agents.

The agents of production capital and those of financial capital will act in unison to fund growth and innovation as long as they are successful and profitable, Perez says.

Society, she says, influences the path taken by the revolution. The concept stretches far beyond the economy to encompass societal and even cultural change.

To that extent, Tizard is on the mark.

Perez says a financial bubble usually characterises the final phase of change: “canal mania” in the 1790s, “railway mania” in the 1840s, the “roaring 1920s” and the bubble of the 1990s.

The installation period ends with a financial collapse, having done among other things replaced old industries, until there is a general acceptance of common-sense criteria for best practice in the new paradigm.

New policies generally tend to regulate financial practices and to contribute toward the expansion of markets through public demand and income redistribution, she says.

Industries and technology systems of a revolution don’t meekly disappear when they reach maturity. Perez says they remain stubbornly fighting for survival during the installation of the next, and only gradually modernise, adopting the new principle when they are forced to by the market superiority of the new paradigm.

When Internet NZ president Peter Macaulay recently opined that the telcos don’t understand networks, he may have been articulating this deeper concept of such change and the telcos’ entrenched financial positions.

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