Tere! Welcome to another TalTech Thursday.
Last week, I finished a course called Techno-Economic Paradigms and Technological Revolutions taught by British-Venezuelan economist, Carlota Perez. It was one of the most eye-opening courses I’ve ever taken. The class left me feeling both optimistic and grounded – a magical combination.
Perez’s theory of techno-economic paradigms and their intertwined technological revolutions helped me understand that many aspects of our current circumstance – a global polycrisis – are entirely precedent and indicative of a global paradigm shift. We’ve navigated these technological transitions five times over in the last 250 years and this current one presents unique challenges and opportunities while also having many historic familiarities.
This TalTech Thursday will aim to give an overview of some of Perez’s fundamental concepts that can help us understand cycles of innovation, market dynamics, and social change that have defined economic progress for centuries.
At its core, a techno-economic paradigm is the prevailing common sense around innovation at a given time. You can think of it as the guiding framework and mindset that shapes how industries and societies organize production, manage resources, and create value. Each paradigm is defined by a set of best practices and efficient processes unique to the period’s leading technologies. Over time, these paradigms become the “common sense” in business and society, as they dictate what’s technologically feasible, socially acceptable, and economically profitable.
Image generated with ChatGPT 4o
Historically, technological revolutions have emerged roughly every 40 to 60 years. Each new wave of technology brings about a “great surge” of development, fundamentally reshaping how societies operate. These revolutions don’t just introduce new products; they modify what is considered acceptable or profitable, creating new opportunities and forcing parts of the old paradigm into obsolescence. Past revolutions – like the age of steam, railways, and today, information communication technologies (ICT) – have launched transformative changes that spread globally in uneven ways
An essential part of these revolutions is the diffusion sequence. The trajectory of each technological revolution includes periods of exuberant financial investment (often leading to bubbles) and a mid-diffusion financial crash, which Perez describes as typical and necessary for eventual stabilization. After the crash, the technology and associated social systems begin to mature, embedding themselves deeply into everyday practices and lifestyle. These deployment phases are often considered “golden ages” when the full potential of the paradigm is realized.
A unique feature of techno-economic paradigms is their reliance not only on technological feasibility but also on political and economic frameworks. Governments play a pivotal role in giving direction to technological and market evolution, and different policies can radically alter the direction of innovation. For example, early support for railways in the 19th century or information technology in the late 20th century catalyzed industry-wide transformations. These actions underscore that the path of technological advancement isn’t purely technical; it’s also a socio-political issue, given governments and citizens guiding which innovations get societal support and investment.
Today, we’re living through a digital and information-based revolution, which, as Perez argues, could pave the way for a “global sustainable knowledge society.” Our challenge is to steer this ICT-enabled paradigm in a greener, smarter, and more equitable direction. This next golden age depends on adopting technologies, policies, and practices aligned with sustainable development goals. As old paradigms fade, it’s crucial for governments, industries, and communities to collaborate on creating an economic model that is inclusive and beneficial for both society and the environment.
Theoretically, the maturation of the ICT revolution – which began in 1971 with the invention of the microprocessor – and its resulting golden age is still ahead of us. So, we are running a bit behind schedule compared to the historical precedent…
Historically, each paradigm reshapes lifestyles, creating new norms and jobs. Just as the oil-driven 20th century led to suburban life, today’s ICT paradigm favors digital services, remote work, and resource-efficient products. This shift has the potential to drive us toward a low-impact lifestyle—one that values knowledge and efficiency over mass consumption. To get there, public and private sectors must work together: governments can incentivize green technologies and education, while industries prioritize sustainable, circular business models.
If we succeed, we’ll see a new golden age defined not only by economic prosperity but also by environmental stewardship and social resilience—a blueprint for thriving in a complex, interconnected world.
Understanding these paradigms and revolutions isn’t just academic – it’s vital for addressing the polycrisis we face, including economic inequality, environmental degradation, and political fragmentation. By identifying where we are in this techno-economic cycle, we can make informed decisions about the directionality of our innovation ecosystems.
Perez’ 2002 book, Technological Revolutions and Financial Capital, is the best source for learning more about these ideas. Her 2022 presentation at itSMF Conference Norway is also very digestible.
You can learn more about Carlota Perez and her work at her website: https://carlotaperez.org/