Cover Story Carlota Perez

cover story Carlota Perez Basic facts NAME Carlota Perez TITLE Professor of Technology and Development, interdisciplinary social scientist, lecturer and consultant AGE 70 RESIDENCE Lewes, East Sussex, UK 10 • EBR #3 2009 RidingTEXT Nathan Hegedus PHOTO Chris Maluszynski the waves – and understanding what hit us When the stock market crashed and the global economy fell into a slump,p, we all wanted to know what hit us. Carlota Perez has some goodg answers. Advocating a return to heavier state involvement in the economy, she has a growingg g audience in both governmeng t and industry among those seeking long− term solutions for a crisis−ridden world. NDARKECONOMICTIMES, Carlota Perez offers a vision of a golden Ifuture, of a broad-based world recovery that harnesses the pow- er of globalization, “green” values and, most importantly, information and communication technologies (ict). Perez, a professor of technology and development, says that the current economic crisis is but one phase of a centuries-old pendular rhythm of capitalism. She argues that the world has seen five great surges of development since the Industrial Rev- olution in the th century, with the first half of each surge marked by speculation and dominated by new technologies and financial capital; the second half is usually an economic and EBR #3 2009 • 11 cover story Carlota Perez Background check ▶ Perez is a graduate in interdisciplinary social sciences from San Francis- co State University in the US, and the University of Paris VII in France. ▶ She is currently Professor of Technology and Development at Tallinn University of Technology in Estonia, and a research associate at the Cen- tre for Financial Analysis and Policy (CFAP) at the Judge Business School at the University of Cambridge in the UK. She is also an honorary research fellow at SPRU University of Sussex and the head of her own consulting firm, Consultores Perez Perez, C.A. Five technological revolutions in 240 years 1771 The ‘Industrial Revolution’ (machines, factories and canals) 1829 Age of Steam, Coal, Iron and Railways 1875 Age of Steel and Heavy Engineering (electrical, chemical, civil, naval) 1908 Age of the Automobile, Oil, Petrochemicals and Mass Production 1971 Age of Information Technology and Telecommunications By “green” Perez means a wider change in 20?? lifestyles, production and transport methods. Age of Biotech, Bioelectronics, Nanotech and new materials? The “American way of life” for the entire world would require seven planets, she says. 12 • EBR #3 2009 “Today’s modern companies – using the ﬂexible wake of financial scandals born of what she calls “casino finance,” people who advocate the return of a more involved state are flock- paradigm enabled by ICT – have network structures with ing to her work. “The intuition about what is needed is highly empowered units following major guidelines with already in people’s minds,” she says. “I hap- pen to express it with a causal explanation a high degree of autonomy. How many governments and convincing historical parallels. But the terrain is already fertile.” have fully understood this fundamental change?” REDEFINING THE STATE Government action is essential to move the economy away from the short-term bias of social “golden age” led by production capi- bles are useful, providing capital for the in- the stock market toward a culture of long- tal and a more active state. frastructures associated with that particu- term investments, Perez says. In a glo- But Perez does not advocate a return to lar surge, even as they cause pain in other balized world, this also means globalized old-style government. She says that regula- parts of the economy and society. regulation – at the very least, a basic level tion must become more flexible and coop- This era of high finance eventually gives of regulation, or “floor,” in those fields with erative, both more local and more global. way to production-dominated “deployment” no physical frontiers, such as finance, the Above all, it must fit modern needs in a periods, marked by prosperity, security and environment, and, yes, telecoms. modern way, a shift she says that has taken generally regarded as “golden ages.” But the “There can be enormous variety from place in each previous “revolution.” transition – or “turning point” as Perez calls country to country, even down to regions “Anybody, be it business or government, it – between the finance phase and the pro- and localities,” she says. “But globalization who tries to behave the way they did fifty duction phase has never been a smooth one. is unworkable without some degree of su- years ago is going to fail,” Perez says. “To- Instead it has been marked by panics, reces- pranational monitoring and supervision.” day’s modern companies – using the flexi- sions, and political confrontations, with the But local regulations are equally impor- ble paradigm enabled by ict – have net- Great Depression the starkest example. tant, she says. Globalization allows busi- work structures with highly empowered Perez is in many ways an ideal person to nesses to identify the best locations for units following major guidelines with a high examine globalization. Born in Caracas, maximizing their productivity and profits degree of autonomy. How many govern- Venezuela and the oldest child of a civil en- along their whole value chain. Many busi- ments have fully understood this funda- gineer and a painter, she spent parts of her nesses – especially in ict – have also moved mental change?” childhood in both Argentina and the US. away from hierarchical, authoritarian struc- She then trained as an architect in the US, tures towards a more lateral, consultative FROM LONG WAVES TO GREAT SURGES later shifting gears to study interdisciplinary “network organization.” Perez is a leading proponent of neo-Schum- social studies in Paris. Local, regional, and national govern- peterian theories. Joseph Schumpeter was In the s, after researching the tech- ments need to recognize and respond to an early th century economist who ar- nological impact of high oil prices, she these shifts and adapt their own organiza- gued that both growth and crises in the cap- served on several delegations to the United tions in order to build a wide societal con- italist system were the result of technolog- Nations. During this time, she says she had sensus on what kind of investments each ical innovation. He identified “long waves” an insight that cheap microelectronics were region wants to attract. of upswings and downswings in growth about the replace cheap oil in shaping the Perez often calls for a new global “man caused by the clustering of innovations dur- direction of innovation. This “naturally” led on the moon” project to mirror the massive ing technological revolutions. Schumpeter her to Schumpeter and his theories on tech- investments in space exploration in the argued that the “creative destruction” of nological revolutions, she says. s. This new project would not send these ups and downs was necessary for men to the moon but would help wean so- long-term growth, no matter the short-term “CASINO FINANCE” ciety off its dependence on high-carbon in- consequences. Perez later worked as director of Techno- dustries and products. But while the race Perez has pursued this idea of technolog- logical Development for the Venezuelan to put a man on the moon in the s was ical revolutions but has questioned the no- Ministry of Industry in the early s and a centralized, national endeavor centered tion of “long waves” in gdp. She has focused has since advised multiple countries, com- in the US and the ussr, this new project instead on new technologies themselves and panies and international organizations. She would reflect Perez’s ideas on newly resur- on the impact of their diffusion across the is also Professor of Technology and Devel- gent states – decentralized, multi-level, in- economy and society. She says the business opment at Tallinn University of Technolo- novative, experimental and, above all, con- climate shifts with each technological rev- gy in Estonia, a research associate at Cam- sensus building. olution and calls these shifts “great surges bridge University in the uk and an honor- Yet change does not have to come from of development.” ary research fellow at the University of Sus- above; it is equally possible on a small scale. There have been five such great surges sex in the uk. “You can have as many pilot projects as since the dawn of the industrial revolution, She first stepped into the global spotlight you want,” Perez told an audience at a Cis- Perez says. Each surge is broken into two with her book Technological Revolu- co Urban Connected Development confer- periods, the first dominated by finance, the tions and Financial Capital: the Dynamics ence in Amsterdam in . “That is the second by production. The finance-domi- of Bubbles and Golden Ages. The book huge advantage of network organizations. nated period is marked by speculation, bub- came out in the wake of the nasdaq stock Local experiments can be replicated either bles and a massive experiment in “creative market crash, and Silicon Valley “techies” nationally or locally.” destruction,” in which new technologies re- and venture capitalists wanted to know The goal of the pilot projects is to find dif- place or modernize older ones. These bub- “what had hit them,” she says. Now in the ferent ways – whether by regulation, taxes, EBR #3 2009 • 13 “There have been many wasted opportunities in history, often for lack of enlightened political leaders” subsidies, contracts or agreements – to tilt tions behave like good citizens, it is an easy the investment playing field in favor of more step to join government and other social ac- low carbon and low materials growth.

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