It’s time to usher in the next golden age of innovation and technology

By Brendan Maton

Photo by Ross Findon on Unsplash

Around the world, from the Philippines to Hungary, there is a rising tide of nationalist fervour urging politicians to make the country great again.

Alas, most of the remedies proposed by populist leaders are backward looking. As Italy’s Five Star Movement has discovered, inventing crowd-pleasing slogans on the outside is much easier than enacting people-pleasing policies on the inside.

Carlota Perez, honorary professor at UCL’s Institute for Innovation and Public Purpose (IIPP), has remedies for the world today. Some are bolder and more radical than those of populist politicians. But the difference is that Perez is looking forward.

And so, she says the great challenge of the environment is not in opposition to human prosperity but a driver for change: we create new products and services that grow the economy and preserve the planet.

In policy this means energy, materials and transport get taxed rather than labour. This will hasten transition away from fossil fuels and waste.

3-D printing should encourage maintenance of goods rather than disposability and sea pollution.

Poorer countries should develop economically for their own benefit but also for that of the advanced world, whose equipment and engineering exports would find new markets. It’s a win-win game that would also quell desperate migration.

Global corporations must pay proper taxes instead of manipulating their profits and losses between subsidiaries and in tax havens.

Such policies don’t sit well with populists like Donald Trump and his supporters who are nostalgic for the past: the era of big cars and big military spending, of insular economies and unlimited consumption of plastics and fossil fuels

While Perez is a big fan of the Keynesian policies that nurtured the golden age of the automobile from the 1950s, of jobs for life and mass consumption, she says that is the oil- intensive and wasteful era we are still trying to get rid of.

The closed company, with its ‘one best way’ of doing things and its hierarchical management structure, is obsolete together with bureaucratic government and the old forms of the welfare state such as unemployment insurance which was fit for stable jobs. She thinks universal basic income would be a more adequate safety cushion in the gig economy of the 21st century.

If in the past a home was the most important asset, Perez believes the asset that now provides security is education. She holds that if governments in the past provided facilities and mortgage insurance, what they now need is to ensure access to increasing quality and quantity of skills and knowledge from early childhood to life-long learning. That is in her view one of the most important policies for supporting employment today and for providing security to all citizens.

These ideas are difficult to accept. But they reflect the modern era of open learning, where knowledge is diffused across networks, not guarded in-house, and individuals move readily across organisations and networks.

If that sounds like a description of an internet or IT company, that is because the modern age is defined by information technology. Herein lies the strength of Perez’s analysis. She views socio-economic change in terms of innovation — what creates jobs in the first place.

At her recent UCL lecture on Rethinking Capitalism, she began by charting the five great waves of innovation of the last 240 years: The Industrial Revolution, the age of railways; the era of steel and heavy engineering; the world of the automobile and mass production, and then, from the 1970s, the age of information and communications technology.

It is not clear in advance how innovation will develop or its uses. Perez reckons every wave has taken several decades to spread across the economy. The first few decades are a huge experiment to learn the new technologies, they are times of ‘creative destruction’, of financial booms, bubbles and crashes such as the Canal and Railway Manias in the UK in the 1790s and 1840s or the ‘Roaring Twenties’. In the latest wave, she says, we have gone through the dot.com bubble at the turn of the century and the global bubble and credit crunch of 2008. The crashes are followed by a recession or setback, when typically, all the victims of those bubble times are angry and follow populist leaders left or right. But the possibilities for a golden age are there. The infrastructure is in place, be it waterways and locks, rail-tracks and circuses, roads and electricity or fibre cable and wifi. The common sense for innovation (what she calls the paradigm of the era) has been learned. The recession and the populist anger can be overcome and can be followed by a golden age, when society can reap the benefits of the revolution, such as in the Victorian boom, the Belle Époque or post World War II.

Right now, Perez places the IT era at the point where its golden age can be reached. But it requires, as in every previous wave, a proactive government that will tilt the playing field in directions that are a win-win game between business and society.

And here Perez strongly criticises those in power: she feels that government even in advanced countries is not configured for the IT age. “They are bureaucracies from the past century: they are not agile or ready for interaction with the people,” she says “they are too centralised and don’t know how to use IT properly.” She sees this as a major problem because historically the responsibility for directing innovation rests with the State. It must set the tempo and the rules so that private enterprise can be profitable, but also socially responsible and beneficial to all. She holds that unfettered markets can create wealth at the top but cannot guarantee general social well-being.

Take two of the popular fears about where IT is headed: robots taking all the manual jobs and artificial intelligence taking all the rest. Perez says that in the previous mass production revolution there was also talk of structural unemployment, with the mechanisation of farms and the factory assembly line seen as the job-takers. However, government support for widespread homeownership and the provision of income security through the welfare state underpinned massive employment in construction, services, retail, advertising, radio and TV and in all other services catering to the new ‘American Way of Life’.

She now sees an equivalent role for government in supporting smart green lifestyles, with new jobs coming from digital services, health, caring, exercise, creativity and education and the adoption of a rental and sharing model, focused on maintenance, reuse and recycling. Perez essentially believes that framing our environmental problems as an economic solution, in combination with the use of information technologies, both in production and in consumption, will bring the next golden age. We can reach for maximum productivity and wealth creation with artificial intelligence, robotics, internet of things, 3D printing, biotech, nanotech and whatever else technology will provide. And, with government support, society can reach a new aspirational way of life with increasing skills and flexible patterns of work for all, while being cushioned by universal basic income.

From the first era of catching a train to the modern era of searching train times on a smartphone, innovation has succeeded by meeting people’s needs. There is no cause to fear the new, but society and government must shape the context to get the best of the new technologies.


Carlota Perez is an honorary professor at the UCL Institute for Innovation and Public Purpose (IIPP) and recently presented a lecture as part of of our Rethinking Capitalism undergraduate module on “Capitalism, technology and innovation”. These lectures will be released weekly to the public. Follow us on YouTube for more or check this page weekly.

Sign up to the UCL Institute for Innovation and Public Purpose’s mailing list to hear about our latest research, news and events. You can also follow us on Twitter: @IIPP_UCL.

UCL IIPP Blog

The official blog of the UCL Institute for Innovation and Public Purpose | Rethinking how public value is created, nurtured and evaluated | Director @MazzucatoM | https://www.ucl.ac.uk/bartlett/public-purpose/

UCL Institute for Innovation and Public Purpose

Written by

Changing how public value is imagined, practiced and evaluated to tackle societal challenges | Director: Mariana Mazzucato | Deputy Director: Rainer Kattel

UCL IIPP Blog

The official blog of the UCL Institute for Innovation and Public Purpose | Rethinking how public value is created, nurtured and evaluated | Director @MazzucatoM | https://www.ucl.ac.uk/bartlett/public-purpose/

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