The Five Great Technology Surges

First Technology Cycle Revolution

The First Great Technology Cycle – Depression and Revolutions

The First Innovation Cycle of the Industrial Revolution: Canals, Bubbles, and Revolution

The Seductive Appeal of Progress

The Industrial Revolution began with an enticing premise: canals and textile spinning machines promised untold wealth to those bold enough to invest. Like moths to flame, investors flocked to these new technologies with a simple philosophy—if some innovation brings profit, more innovation must bring greater fortune. This tantalizing logic holds… until it catastrophically does not.

When investment bubbles finally burst, they do not merely deflate—they implode. Overvalued ventures collapse as panicked investors scramble to salvage whatever remains of their fortunes, triggering economic avalanches that bury dreams and livelihoods alike.

England Leads, Europe Bleeds

While England pioneered technological development, mainland Europe suffered the most violent social upheavals. This pattern reveals a crucial insight: leading economies typically adapt their governance to accommodate technological revolution, allowing them to harness its benefits while mitigating disruptions. Meanwhile, nations struggling to catch up often remain blind to the true forces driving economic transformation, with devastating consequences.

Canal Mania: The First Bubble

The Duke of Bridgewater’s thirty-mile waterway, connecting coal mines to textile factories, ignited the canal revolution in 1767. Its success unleashed an infrastructure frenzy, creating over four thousand miles of artificial waterways across Britain.

Early investors enjoyed handsome returns, which only intensified the hunger for more. Parliament, required to authorize each new canal, was deluged with proposals. From a single approval in 1790, the number exploded to fifty within a few years, more than double all authorizations from the previous half-century combined.

The investment market transformed from rational enthusiasm into a speculative fever. Shares changed hands rapidly, purchased not for dividends but for quick profit in a dizzying game of financial musical chairs. Many bought stakes in canals that would never be profitable—or even built. This “canal mania” exhibited all the classic symptoms of a bubble poised to burst.

Revolution: The European Aftershock

Across the Channel, King Louis XVI’s France had its problems. Financially drained after backing the American Revolution, the French treasury was nearly empty—a situation made worse when French speculators poured what little currency remained into England’s canal bubble, further feeding the frenzy.

When the inevitable crash came, asset values collapsed. France’s already precarious national debt became unsustainable, forcing the desperate King to resurrect the ancient States-General assembly after a 179-year absence—a body whose medieval structure guaranteed control by the aristocracy and the clergy.

The result? The French Revolution erupted in 1793, transforming what historian Eric Hobsbawm described as “a minor local revolt” into a world-changing political cataclysm—all triggered by the economic aftershocks of technological disruption and financial collapse.

The second technology cycle: Steam and Rail

Wikipedia: The French Revolution