Thursday, July 2, 2009

Book Review: Technological Revolutions and Financial Capital

I just finished reading "Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages" by CarlotaPerez. This is a book I decided to read because I had heard senior IBMexecutives talk about it in the pasts. Two things struck me: one wasthat the IBM executives clearly valued what she had to say. The otherwas that her work made predictions about the current economiccrisis. While it is dense in part, overall I enjoyed the book andfound the model it contained quite compelling.

The basic idea of the work is that since the industrial revolutionthere have been 4.5 great surges of technological advances, eachlasting around 50 years. These surges were: the industrial revolution,the age of steam and railroads, the age of steel, the age of oil,cars, and mass production, and the information age. Each surgeoverlaps with the previous surge and goes through 4 distinct phases ofapproximately 10 years each: irruption, frenzy, synergy, and maturity.

The irruption phase begins with some big bang (identified inretrospect) identifying the new technology. The technology quicklygrows, while the old economy stagnates. In the frenzy stage, thefinancial capital that has invested in the new technology and newcompanies gets used to the staggering returns from the new technologyand expects them to continue. All businesses are expected to givelofty returns, more people enter the market, and there is assetinflation as the paper value of companies and other assets separatesfrom there productive value. As this continues, financial capitalstarts to invent ways to make money from money.

The frenzy phase ends with a market crash and correction. The crash isactually a very important part of Perez's model. The crash isnecessary to implement the new regulations needed for the newtechnological paradigm, and for the worlds of production capital tocome back into harmony with production capital. If this is done well,it can lead to a golden age in the synergy phase. The synergy phaserepresents the extension of the new technology to the rest of theeconomy, with the related increases in productivity.

At the end of the synergy phase, the new technology is starting tosaturate in its growth. This marks the beginning of the maturityphase. There are fewer and fewer parts of the economy to spread thenew technology too. Because of this, growth slows. As growth slows,there is a lot of idle capital looking for good things to investin. Additionally, the producers look into new areas and technologiesto prop up their now stagnating business. The idle capital and therenewed interest from established companies will provide theopportunity for the next technology to emerge, and the cycle repeats.

There are a few key themes and ideas in the book. One of them is theroles of financial capital and production capital through thecycle. Financial capital is the money, while production capital arethe people who make things. Financial capital can quickly move fromone technology to the next and is crucial in the creative destructionof old technologies and the emergence of new ones. However, productioncapital is key to successfully deploying the new technology throughoutthe economy. Additionally, production capital is very slow tochange. Production capital represents the people actually running thebusinesses. They have to have a very detailed understanding of thetechnologies, and need such an understanding to besuccessful. Therefore, they will stay with what they know as long aspossible.

Another key idea is the 50 year cycle. Perez argues that the 50 yearcycle is inherently human. Each of the great surges represents aparadigm shift in the technology and how people live. The ideasconsidered common sense are different in the different paradigms. Ittakes the first half of the 50 year cycle for the population tointernalize the new paradigm. This internalization is key to itscomplete exploitation in the synergy phase. Once the paradigm isinternalized, the new technology dominates everything and there isreal and good growth in the economy. It then takes another 20-30 yearsto fully exploit this internalization, before most gains have beenexploited. The force of this internalization is what really driveseverything. And the internalization inherently forces out any ideasthat do not fit within the paradigm. There very well may be wonderfultechnological advances that happen throughout the cycle. Incrementaladvances will be included within the new paradigm. Radical advanceswill be shunned, except in the maturity face. The new, radical ideasare just too risky for financial or production capital to invest inwhen the old paradigm is still providing good returns. It is only whenthe old paradigm stops providing good returns that the idle capitalshows up, allowing the next revolution to occur.

Wednesday, May 20, 2009

New Glasses Take II

I managed to lose my new glasses in DisneyLand while visiting with Mickey Mouse. We actually have a picture with Mickey Mouse and I have my glasses on, and I couldn't find them by the next ride. And they didn't show up in lost and found. So, it was time to try ordering again. 

After I ordered my previous pair, my friend Steven ordered a pair from Zenni. I had avoided them before because they are not in good standing with the BBB. He had a good experience, and they are so cheap I decided to give them a try. I ordered a pair of titanium bendable frames, AR coating, and clip on sunglasses, all for $27. It took about 3 weeks for them to show up, but they did earlier this week. They aren't exactly what I expected, but I still like them. And if I decide I don't like them, I can just order another pair since they are so cheap. I may do that anyways so that I have a good spare pair aournd. 

Tuesday, February 17, 2009

Insurance coverage for glasses

In my previous posts I described ordering my new glasses, and their arrival. There was one more detail to take care of: the insurance claim. Through work I have VSP for eye coverage. That covered my eye exam for the in-network optometrist. However, 39DollarGlasses is definitely out of network. For out of network glasses, my plan is supposed to cover $25 for lenses and $35 for frames. I wasn't sure how that was going to work since the site just list $39 for the glasses + $25 for the anti-reflective coating. 

After ordering my glasses I printed out a special insurance receipt from the 39DollarGlasses website. It split the $39 in half for the glasses, and listed the anti-glare. I submitted the form, and today a check arrived. They listed $19.50 for the frames (credited for $19.50) and $19.50 + $25 = $44.50 for lenses (credited at the maximum of $25), and nothing for the shipping. I was hoping that I would just get the full $60, but this is as good as I could reasonably expect. 

Monday, February 2, 2009

Glasses are a success

I had previously posted about my new glasses I ordered on the internet. My only problem was that the glasses were a little crooked on my face. I emailed the vendor over the weekend to ask what I should do. They suggested that I either send the glasses back to have the frames replaced, or go to an optician to have them adjusted. I didn't really like either option, so I decided to try myself. 

If you do a google search on adjusting glasses a lot of things turn up, especially videos. I found this set of videos particularly useful. I followed the simple instructions in this video to adjust the arm on my glasses. One simple adjustment and now my glasses fit perfectly. I'm very excited. 

I've also started to put my glasses links into delicious with the tag glasses

Friday, January 30, 2009

My new glasses

I've mentioned to a number of colleagues and friends recently about getting new glasses, and wanting to order them online. A while ago I found this site describing how much cheaper eye glasses are to order online, and how to order them. After getting a recent eye exam I finally pulled the trigger and ordered the new glasses online. 

Since this was my first experiment with ordering glasses online, I ordered a simple pair.  I ordered the glasses from 39DollarGlasses last Saturday. Monday morning I received an email indicating they had started processing my glasses and they should be ready in 2-4 days. Late Monday afternoon I received a second email saying my glasses had shipped. Even though I have a very simple prescription, I was still amazed by this. The glasses showed up in my mailbox on Wednesday. 

Now I'm dealing with the last step and strongest argument for the local optician: adjusting the glasses. I've worn them comfortably for the last couple of days, but they need some adjustment. I may call customer support for advice, or try to adjust it myself, but for now I'm very happy with them. If I figure out this step I couldn't imagine going back to buying from the local optometrist for glasses.