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Carlota Perez - ICT and GREEN: A Natural Partnership To Nurture


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Carlota Perez - ICT and GREEN: A Natural Partnership To Nurture

  1. 1. ICT and GREEN A NATURAL PARTNERSHIP TO NURTURE Shaping a sustainable globalization and redesigning the ‘good life’ Prof. Carlota Perez Universities of Cambridge, Tallinn and Sussex CUD Global Conference September 2008 Amsterdam, September 23-24
  2. 2. Is global growth environmentally sustainable ? Is full globalization compatible with the so-called “American way of life”? Why do so many people around the world think that the “American way of life” is the best? Could there be better? Is ICT part of the problem or part of the solution? UNDERSTANDING TECHNOLOGICAL REVOLUTIONS AND PARADIGM SHIFTS CAN HELP ANSWER THOSE QUESTIONS
  3. 3. Some crucial relationships to examine TECHNOLOGY SOCIETY MARKET PROFILE The historical analysis reveals a process of mutual shaping WITH MAJOR MARKET CHANGES EVERY HALF-CENTURY
  4. 4. FIVE TECHNOLOGICAL REVOLUTIONS IN 240 YEARS Britain 1771 The ‘Industrial Revolution’ (machines, factories and canals) Each begins in a core country… Britain 1829 Age of Steam, Coal, Iron and Railways Britain USA 1875 Age of Steel and Heavy Engineering (electrical, chemical, civil, naval) Germany USA 1908 Age of the Automobile, Oil, Petrochemicals and Mass Production USA 1971 Age of Information Technology and Telecommunications USA? Europe? Both? 200?? Age of Biotech, Bioelectronics, Nanotech and new materials? Other? Each takes 40-60 years to spread across the world and reach maturity
  5. 5. Why call them revolutions? Because they transform the whole economy! NEW INDUSTRIES and NEW PARADIGM FOR ALL New generic technologies, A powerful cluster infrastructures and of visible new and dynamic organizational principles capable industries of modernizing and infrastructures the existing industries too Explosive A quantum growth jump in and structural innovation and change productivity potential for all A massive change in the direction of change CHANGING THE OPPORTUNITY SPACE AND RESHAPING SOCIETY
  6. 6. Each technological revolution provides a new inter-related set of life-shaping goods and services at ‘affordable’ prices The British ‘middle classes’ establish Age of Steam, Coal, VICTORIAN an industry-based urban lifestyle iron and railways LIVING different from that of the country-based aristocracy. It spreads to new upper classes elsewhere Age of Steel and British, European and American Heavy Engineering THE BELLE EPOQUE upper and middle classes establish First Globalization a cosmopolitan lifestyle spreading to the upper classes of the world American upper and middle classes establish Age of the Automobile, a suburban energy-intensive lifestyle Oil, Petrochemicals THE AMERICAN spreading to the working classes and Mass Production WAY OF LIFE of the advanced countries and to the middle classes of the developing world Will the affluent educated classes of the developed ? Age of Information SUSTAINABLE and emerging countries Technology and GLOBAL establish an ICT-intensive knowledge society Telecommunications LIFESTYLES with a variety of environmentally friendly lifestyles and consumption patterns??? Each new style becomes the embodiment of progress and comfort shaping the “good-life” desires and dreams of the majority
  7. 7. The emergence of the ‘American Way of Life’ as the paradigm shift from the 1910s… FROM ENERGY-SCARCE LIVING TO ENERGY-INTENSIVE HOMES AND MOBILITY Energy is expensive and often inaccessible Energy is cheap and its availability unlimited Trains, horses, carriages, stage coaches, Automobiles, buses, trucks, ships and bicycles airplanes and motorcycles Local newspapers, posters, theaters, parties Mass media, radio, movies and television Ice boxes and coal stoves Refrigerators and central heating Doing housework by hand Doing housework with electrical equipment Natural materials (cotton, wool, leather, silk..) Synthetic materials Paper, cardboard, wood and glass packaging Preference for disposable plastics of all sorts Fresh food bought daily Refrigerated, frozen or preserved food from specialized suppliers bought periodically in supermarkets Urban or country living and working Suburban living separate from work …all strongly aided by advertising, business strategies and government policies
  8. 8. THE CURRENT TECNO-ECONOMIC PARADIGM SHIFT beginning in the 1970s FROM THE LOGIC TO THE LOGIC OF CHEAP ENERGY (oil) OF CHEAP INFORMATION for transport, electricity, its processing synthetic materials, etc. transmission and productive use Huge potential Excessive use for savings in of energy, energy and materials materials and tangible products Preference for intangible value Each paradigm opens different new routes for making profits as well as for achieving socially desirable goals
  9. 9. Three of the many new directions of the current paradigm shift Mass production ICT- Flexible production Adaptability (including upgrading as change) Niche markets; ‘the long tail’ HOMOGENEITY DIVERSITY Potential for a great variety of lifestyles on a common ICT platform Global economy with differentiated NATIONAL ECONOMIES GLOBALIZATION national, supranational and local spaces Measurement, monitoring and control CAPACITY FOR Recycling and refurbishing UNAVOIDABLE ENVIRONMENTAL Conservation; closed-loop systems ENVIRONMENTAL DAMAGE PROTECTION Avoiding pollution and waste But the shift to the new opportunity space has not fully happened yet
  10. 10. THE NEW PARADIGM IS STILL WRAPPED IN THE OLD Mass production disposability and high use of energy and materials is still with us It’s just like the first automobiles that began looking like horse driven carriages An automobile in 1898 Reproduction: L.De Vries. 1972 WHY? Because cheap oil and cheap Asian labor favored the stretching of the old consumption patterns in the crucial 1990s
  11. 11. CAN THE NEW PARADIGM PREVAIL? YES IF economic circumstances change IF it becomes an aspiration of the majorities IF it is a positive sum game between business and society Sustainability must at the same time… “create economic opportunities and improve the quality of life” President Bill Clinton CUD 2008 Conference, San Francisco …and IF governments become proactive and define a new playing field clearly tilted towards “green”
  12. 12. Quality of life is measured by fulfilment of values and aspirations Those aspirations are historically determined by the way society shapes each successive technological potential The “luxury” life: ENABLERS values and aspirations under THE MASS PRODUCTION PARADIGM • Low cost of products • Consumer credit • Unemployment insurance • Brand new is better than old • Official trade unions • Bigger is better than smaller • Savings and loan banks • Low cost housing • More is better than less • Easy mortgages • Synthetic is better than natural • Fabricated is better than hand-made OPINION SHAPERS • Disposable is comfortable • Role models • Leisure is rest (not exercise) • Advertising • Shopping is a leisure activity • Movies, TV • If you don’t keep up with the Jones’, • Relative prices you are falling behind • Marketing strategies
  13. 13. The shift to “ICT-green” consumption patterns is possible IF NOT BY GUILT AND FEAR BUT BY DESIRE AND ASPIRATION Through shaping and enabling a change in our notions of luxury and the “good life” BUT IT MUST HAPPEN FIRST AND VISIBLY IN THE ADVANCED COUNTRIES
  14. 14. The notions of luxury and good taste emerge at the top of the income scale and spread by imitation PART OF THE PARADIGM SHIFT IS ALREADY HAPPENING • Small is better than big • Natural materials are better than synthetic • Multipurpose is better than single function • ‘Gourmet’ food is better than standard • Fresh organic fruit and vegetables are healthier • Exercise is important for well being • Global warming is a real danger • Not commuting to work is possible and preferable • Solar power is luxurious • Internet communications, shopping, learning and entertainment are better than the old ways , etc. BUT RELATIVE PRICES AND WIDER INTERESTS HAVE TO FOLLOW! WILL THEY?
  15. 15. Major transformations to expect (or to participate in) Energy systems Freight transport & distribution RISING COSTS OF ENERGY, New materials and recycling MATERIALS AND TRANSPORT Packaging and conservation Waste disposal POTENTIAL OF INFORMATION AND COMMUNICATIONS Education TECHNOLOGIES Health and well being GROWING Sports and leisure ENVIRONMENTAL THREATS Cultural activities Third Age living Architecture and urban planning Etc. etc.
  16. 16. An example of future innovation paths THE IMBALANCES IN THE GLOBAL LOGISTICS INFRASTRUCTURE 5th surge technologies 5th surge paradigm deeply transforming modernizing 4th surge telephony 3rd and 4th surge technologies DIGITAL TRANSPORT ≠ PHYSICAL TRANSPORT Rapidly expanding Slowly expanding Ultra efficient Modernizing Cost decreasing Cost increasing
  17. 17. THE CURRENT ROUTE TO GLOBALIZATION IS AN EXPLOSION IN FREIGHT TRAFFIC Since the 1990s goods trade grows more than twice as fast as production Global merchandise production and trade in volume 1950-2004 Micro-processor Micro- NASDAQ Big-bang Big- collapse 350 Deployment 4th Installation 5th T.P. World Merchandise Exports 300 Index 1980 = 100 250 200 World Merchandise Production 150 100 50 Source: WTO 0 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 1950 1953 1956 1959 1962 1965 Massive innovation will be needed to cope with (or to avoid) the consequences
  18. 18. IN THE CURRENT PATTERN OF GLOBALIZATION THE LION’S SHARE OF THE NEW TRADE IS IN GOODS; NOT IN SERVICES U.S. Exports and Imports of Goods and Services (current billions US$), 1970-2002 1400 Installation 5th TP 1200 Goods Imports 1000 Billion US$ 800 Goods Exports 600 400 Services Exports 200 Services Imports Source: WTO 0 1982 1994 1986 1990 1998 1974 2002 1970 1978 MUCH INNOVATION WILL HAVE TO COME FORTH TO MAKE GLOBALIZATION ENVIRONMENTALLY FRIENDLY
  19. 19. THE NEW INNOVATION PATHS IN DEPLOYMENT Information and logistics infrastructure Business Digital models networks Re-design Coordination Post-sales ICT maintenance Packaging User Etc. participation Service at Handling destination PHYSICAL Technical PRODUCTS services Energy Land/water/air Storage Transport Distribution Materials systems Environmental …and ICT management is the most powerful complement to advance in the new directions!
  20. 20. A sustainable development path for a positive-sum global future is possible BUT IT WILL NOT HAPPEN AUTOMATICALLY Even with the likely price changes, uncertainty would refrain investment THE MARKET CANNOT DO IT ALONE WE ARE PRECISELY AT THE HISTORICAL MOMENT WHEN THE STATE MUST COME BACK INTO THE PICTURE To understand this statement we must look into HOW TECHNOLOGIES PROPAGATE
  21. 21. EACH TECHNOLOGICAL REVOLUTION PROPAGATES IN TWO DIFFERENT PERIODS The first half sets up the infrastructure and lets the markets pick the winners the second half reaps the full economic and social potential INSTALLATION DEPLOYMENT INSTALLATION DEPLOYMENT Turning Point Recessions, institutional recomposition and role shift “Creative destruction” “Creative Learning the new construction” Degree of diffusion of the new technological potential unlearning the old Led by A great production capital market experiment Applying the paradigm Led by to innovate financial Major across all sectors technology and to spread capital bubble Ending in the social benefits a stock market more widely crash Until maturity and exhaustion ??? Time Next big-bang 2O - 30 years 2O - 30 years big-bang We are here
  22. 22. The historical record: bubble prosperities, recessions and golden ages TURNING INSTALLATION PERIOD POINT DEPLOYMENT PERIOD Bubble Golden Age 1771 Great Britain Canal mania 1793–97 1793– British leap 1829 Britain Railway mania 1848–50 1848– The Victorian Boom 1875 London funded global market Britain / USA Belle Époque (Europe) infrastructure build-up 1890–95 1890– Germany (Argentina, Australia, USA) “Progressive Era” (USA) Europe 1908 The roaring 1929–33 1929– Post-war USA twenties USA Golden age 1929–43 1929– 1971 Telecom mania, Internet USA emerging markets 2000/7–? Sustainable global 2000/7– and NASDAQ knowledge-society ”golden age”? Each Golden Age has been facilitated by enabling regulation and policies for shaping and widening markets
  23. 23. The sequence of propagation has four phases and a break 20 – 30 years 20 – 30 years INSTALLATION PERIOD DEPLOYMENT PERIOD Degree of diffusion of the technological revolution MATURITY SYNERGY TURNING POINT Market saturation Financial and Bubble Technological social explosion Golden Age unrest FRENZY IRRUPTION Time big-bang Institutional Next Crash recomposition big-bang
  24. 24. And the focus and intensity of innovation change with each phase Focus of inovation in Focus of inovation in INSTALLATION DEPLOYMENT TURNING Irruption Frenzy POINT Synergy Maturity NEW FINANCE ALL INSTITUTIONS All industries TECHNOLOGY NEW ALL INDUSTRIES Future industries INDUSTRIES TECHNOLOGY AND ACTIVITIES […and social rebels] Finance INDUSTRIES and modernization of the old ones The logic of the techno-economic paradigm guides innovation in each area as the focus shifts among the actors and the agents
  25. 25. How much institutional innovation was put in place to enable the full deployment of the mass production paradigm and bring on the Post War Golden Age? ?
  26. 26. POLICIES TO FAVOR AND EXPAND DEMAND FOR MASS PRODUCTION Welfare State: Progressive income tax for redistribution, Unemployment insurance and pensions (safety nets) Universal access to electricity, roads, telephone, education, etc. Facilitating “mass consumerism”: Consumer credit systems Reduction of the labor day, week and year, Institutionalized labor unions (for salary increases), Accessible savings, loan and mortgage systems for suburban housing, etc. Widening government demand: Increasing taxes for State expenditure Defense, mass education and health systems, Infrastructures, public services, etc. Marshall Plan For reconstructing European production and consumption capacity The welfare state and the facilitators of the suburban living model incorporated the workers into the middle income consumer layers
  27. 27. And further institutional innovation regulated international trade and finance and kept relative peace • Bretton Woods (US dollar backed by gold) • International Monetary Fund (IMF) • World Bank • General Agreement on Tariffs and Trade (GATT) • Political independence for colonies • The United Nations • The Cold War • Etc. We will need equivalent imagination and determination to innovate towards the Global Knowledge Society Golden Age
  28. 28. Setting up the framework for a sustainable knowledge society THE LEVELS Global THE ACTORS National Government Regional Business THE GOAL Local Civil society (especially A “green economy” A global NGOs) “man-on-the-moon” Universities project Media THE MEANS Building a widespread consensus Innovative policies to change market conditions A tilted playing field on a global scale To be effective, the changes and the policies must be clear, reliable, enforceable, long-term and commanding widespread agreement
  29. 29. INNOVATING TO SHIFT THE DIRECTION OF INNOVATION WILL NOT BE EASY Due to more than half a century of the mass-production cheap-energy paradigm habits, previous investments and externalities are all in favor of high carbon technologies A “level playing field” for high carbon and low carbon competitors, will require changing it strongly in favor of low carbon
  30. 30. TILTING THE FIELD BOLDLY IN FAVOR OF “GREEN” ENHANCE MODIFY THE SOCIO- Business decisions: THE POLICY ECONOMIC CONTEXT CONTEXT INNOVATION LOCATION Incentives: INVESTMENT Cost offsets Relative costs Etc. tax breaks, etc. and prices Disincentives: Other costs: Consumer decisions: Taxes, tariffs, Time, risk, etc. charges, etc. EXPENDITURE Rules and Public attitudes LOCATION regulations: and opinions BEHAVIOR Recycling, caps, ETC. etc.
  31. 31. John Chambers, Cisco CEO CUD 2008 Conference, San Francisco “It is important to have supportive governments… “We must all collaborate to paint a vision and realize a new architecture… I wouldn’t have said this ten years ago” The pure market ideology and practice already played its role facilitating the installation of the ICT paradigm. Today, market fundamentalism is as much an obstaclefor full deployment as State fundamentalism was for Installation before THE TIME IS RIPE FOR THE STATE TO COME BACK INTELLIGENTLY AND PROMOTE A CONSENSUS VISION
  32. 32. The answer to whether sustainable global growth is feasible is, therefore, YES! But neither pure “free markets” nor simple “environmentalism” will get us there The innovation potential of the ICT paradigm can and must be collectively redirected towards new patterns of environmentally friendly well being and a new profit-making dynamic for business But it depends on us AND THE TIME TO ACT IS NOW!
  33. 33. THANK YOU!