The Five Great Technology Surges

First Technology Cycle Revolution

The Five Great Technology Cycles – Depression and Revolutions

The Pattern of Technological Revolutions and Economic Cycles

Throughout modern history, a clear pattern of technological “Great Surges” has driven economic booms, speculative bubbles, crashes, and tremendous social upheaval. Each surge follows a predictable trajectory: technological innovation creates economic growth, leading to investment bubbles and crashes that trigger social disruptions most severely felt in secondary economies. The cycle has been obscured because, typically, after the crashes, stability returns in the form of “golden ages.”

First Surge (1767-1830s): Canals and Textile Spinning
  • Began with the Duke of Bridgewater’s canal in England
  • England built over 1,000 miles of canals, creating a “canal mania” investment bubble
  • When the bubble burst, secondary economies like France experienced severe economic distress
  • This economic collapse triggered the French Revolution of 1793
Second Surge (1830-187os): Steam & Railroads
  • Early profitable rail lines paid dividends four times greater than prevailing interest rates
  • Investment frenzy led to hundreds of railway schemes, many fraudulent
  • The bubble burst in October 1845, with share values dropping 40%
  • Secondary economies in mainland Europe suffered catastrophic unemployment and food shortages
  • The economic collapse triggered the “Revolutions of 1848” across Europe, historically referred to as “the Spring of Nations.”
Third Surge (1875-1907): Electricity, Steel & Heavy Engineering
  • Unique transition surge where leadership shifted from Britain to Germany and the US
  • The “Long Depression” of the 1890s featured unusual timing across different economies
  • Began with the Baring Banking crisis after excessive investment in South American railroads
  • The boom-bust cycle led to rising populism in response to economic hardship
  • Nationalism intensified as older empires declined, setting the stage for WWI
Fourth Surge (1908-1974): Internal Combustion Engine and Oil
  • Henry Ford revolutionized mass production with the Model T
  • The “Roaring Twenties” saw stock values quadruple, fueled by wealthy speculators
  • The Great Depression followed with 25% unemployment in the US
  • Economic devastation in Europe, particularly Germany, contributed to the rise of fascism
  • Led ultimately to World War II and unprecedented destruction
Fifth Surge (1970s-??): Information & Communication Technology
  • The 1990s dot-com boom mirrored the Roaring Twenties
  • NASDAQ grew from 100 points in the early 1970s to over 5,000 at its peak
  • Initial crash in 2000 moved investment capital into real estate
  • The 2008 financial crisis resulted from this speculative bubble
  • Remarkably similar market patterns to the 1929 crash (proven by overlaying both graphs)
  • Triggered the “Arab Spring” revolts in the Middle East. In the US, Occupy Wall Street protests
Key Patterns Across All Surges
Speculation and Bubble Formation
  • Each surge generates excessive investment in new technologies
  • Legal frameworks are circumvented to enable rampant speculation (margin buying, fraudulent schemes, financial derivatives etc)
  • Assets become dramatically overvalued before the inevitable crash
Differential Impact: Leaders vs. Followers
  • Leading economies (typically Britain, then the US) weather crashes better when they were the outright technology leaders
  • Secondary economies suffer more severe consequences (“the leader catches a cold, followers catch pneumonia”)
  • Social unrest and revolution typically occur in secondary economies
Social Protection and Stability
  • Countries that protect their middle class experience less social disruption
  • Britain’s voting reforms and social protections after the railway mania helped maintain stability
  • FDR’s New Deal programs similarly helped the US avoid revolution after 1929
Social Response to Crashes
  • Economic crashes consistently trigger political upheaval
  • The French Revolution (1793), the Spring of Nations (Revolutions of 1848), the rise of fascism (1930s), and the Arab Spring (2011) all followed economic collapses
  • New communication technologies accelerate revolutionary contagion (telegraphs in 1848, social media in 2011)
They constantly repeat – why they are “cycles”

These technological surges follow remarkably similar patterns despite occurring in different eras and involving different technologies. The cycle appears inherent to capitalist development:

This pattern has repeated five times since the late 18th century, with each cycle lasting approximately 50-60 years. The consistency of these patterns suggests they are structural features of technological development and capital formation rather than coincidental historical events.

As we advance through the information age, understanding these cyclical dynamics becomes crucial for anticipating and potentially mitigating the social and economic disruptions that accompany technological revolutions.

Wikipedia: The French Revolution