Over the past 250 years, the progress of human production and life has been closely related to the six waves of technological innovation, and our current social structure and economic cycle come from the following "creative destruction".

Photo Source: Visual Capitalist

Wave and the cycle of innovation

According to the Edelsen InstituteFrom the steam and electricity revolution to the Internet information revolution in the 1990s, there were six waves and key breakthroughs.

1. Since the 1860s, the first industrial revolution rolled forward, the mode of human production and manufacturing gradually changed to mechanization, and hydraulic power played an important role in the manufacture of papermaking, textiles and iron products. Thanks to the large-scale mode of production and the birth of factories, cities also pour in a large number of people.

2. Between 1845 and 1900, the steam engine led the second wave of technology, and the railway industry not only made rapid and large-scale population movement possible, but also revolutionized the structure of trade. At this stage, the capitalist system also began to transition from the free competition stage to the monopoly stage. In addition, the rapid development of theoretical research in basic physics and chemistry also laid the foundation for the subsequent wave of science and technology.

3. The internal combustion engine fueled by gas and gasoline improves the thermal efficiency, promotes the development of the oil mining industry and the production of the petrochemical industry, promotes the rapid development of cars, ships and airplanes, and accelerates globalization.

4. Large-scale applications have emerged in electrical appliances, telephones enable people to communicate over long distances, and television has spawned new content industries such as advertising.

5. The development of computers and software has changed the way information is stored, and the Internet has changed the way information is transmitted, which not only makes access to information accessible, but also breaks the discourse system dominated by elites.

6. The digital revolution, led by self-driving, artificial intelligence, Internet of things, block chain and so on, is forming the sixth technology wave.

The influence of "Creative destruction" on Market and economy

The economist Joseph A. Schumpeter first put forward the theory of "creative destruction" in his book the Theory of Economic Development published in 1912, and showed that the economic cycle operates under long-wave innovation.

Schumpeter regarded entrepreneurs as the main body of innovation, and said that "only by creatively destroying the inertia track of the economic cycle and promoting the revolutionary destruction of the economic structure from within can there be economic development."

This kind of creation and destruction of the structure is mainly realized not through price competition but by innovative competition. Every large-scale innovation eliminates the old technology and production system, and establishes a new production system.

"Creative destruction" has not only brought about technological revolution and industrial change, but also changed the economic cycle.

In Schumpeter's view, technological innovation has promoted economic growth and improved people's living standards.But these creative saboteurs also lead to the trend of financial capital monopoly. In the upswing of a cycle, there is usually a winner-takes-all phenomenon.

For example, at the peak of the second wave in the 19th century, railroads accounted for 60% of the market capitalization of all companies in circulation on the New York Stock Exchange.

The momentum is even worse today, with tech giants having a staggering market capitalization, holding all kinds of information about people, including food, clothing, housing and transportation, and controlling the distribution of information on search engines and social networks.

Thanks to the improvement of production efficiency after each technological change, the cycle of each round of innovation is also shortening.

In addition, with the rapid development of technology, the climate problem is becoming more and more urgent. Electric vehicles and self-driving are born under this background, which also gives birth to the possibility of being rewritten by a large number of new technologies.