Wen Qinghe, President of Zhiben, the picture from: Visual China

Which era is the world today in the long history of humankind?

Technology is the fundamental driving force to change the stagnation of the human economy for thousands of years. Technological shocks bring economic fluctuations and social changes. However, the uncertainty of technological innovation has severely affected our prediction of the future of the economy.

From a business cycle perspective, humans have now reached the bottom of the fourth round of technology diffusion. The information revolution is declining, the dividend of technology diffusion is gradually disappearing, and countries are trying to stimulate the currency to refuse the economy to fall into low growth. How do you know that the world is slipping into the “Malthas Trap”.

What will we face in the era of rational expectations bubbles?

This article uses the innovation diffusion theory of Rogers, an American communication theorist, to try to analyze the relationship between technological innovation, the financial crisis, and the economic cycle, and to look at the path of human economic evolution from a grand historical perspective. future.

This article is the second in a series on “The Mystery of Low Growth” (“The Mystery of Low Growth | Can the Chinese Economy Continue to Grow?”

Logic of this article:

A thousand years of stagnation: How does human society set sail?

Second Century Rise: How Do the Powers of the Great Powers Rise?

III. Future world: How to eliminate financial suffering?

01 Millennium stagnation: How does human society set sail?

During the thousand years of human history, the economy has been in a state of almost stagnation for a long time. British scholar Angus Maddison used the “international dollar” in the “Millennium History of the World Economy” to calculate that the per capita GDP of Western Europe and China had stagnated for a long time at 450 international dollars or less before 1000 AD.

This is called the “low growth mystery,” or the millennium stagnation.

(technical innovation) and economic growth? If this problem is not solved, humans will always live in the anxiety of technical uncertainty.

French economist Bascia touched the essence. He discovered through market division of labor that growth comes from people’s grasp and use of natural laws. ( . Schumpeter integrated the Austrian and neoclassical ideas, and combined technological innovation with economic growth for the first time, creating the business cycle theory “, Schumpeter) .

Schumpeter believes that the result of each technological innovation is the next depression that can be expected; each time the economy enters a recession, it means that new technological innovations are brewing, and economic recovery and prosperity are coming. The driving force of this process is what Schumpeter calls “creative destruction” of entrepreneurs. [2]

Picture: World economic growth from 1800 to 2009, source: Madison [1]

If the curve of economic growth since the first industrial revolution is enlarged, Schumpeter’s business cycle can be presented: prosperity, recession, depression, recovery.

This is a track of economic growth driven by technological innovation. Since modern times, human beings have exploded a total of three typical “industrial revolutions”, namely the first industrial revolution that broke out in Britain in 1760, the second industrial revolution that broke out in the Western world in 1860, and the Materials, biotechnology and information technology revolution.

In the “History of Economic Growth Theory”, American economic historian revealed that the “technical dividend” of each industrial revolution is 55 years, that is, when a major new technology is introduced for 55 years, the economic growth rate will gradually decrease until Return to previous low levels. [3]

In the past, the interval between each industrial revolution was about 100 years. If the major technological dividend is maintained for 55 years, after each major technological revolution, we first experience a 55-year high growth and then face a 45-year low. Growth state until the arrival of the next major innovation.

So, the wave of technological innovation determines the wave shape of economic growth. The human economy is increasing above the technology wave by (the margin curve is shifted to the right) and decreasing by the technology wave. label = “Remarks”> (the margin curve slopes down to the right) .

The economics principle of the technological revolution to promote economic growth is: change the assumptions of the law of diminishing marginal returns, technological innovation will shift the marginal diminishing curve to the right, pushing economic growth to a whole new level (and then continue to decrease) to achieve increasing economies of scale.

Schumpeter pointed out that each long period includes six middle periods, and each middle period includes three short periods. Among them, the short period is about 40 months, and the middle period is about 9-10 years.

Among them, the Kitchin cycle is a short cycle (40 months) , which is affected by psychological drive and the food cycle; the Jugra cycle is a medium cycle span class = “text-remarks” label = “Remarks”> (9-10 years) , the Kuznets period is a medium-long period 15-25 years) , mainly driven by investment and real estate.

Schumpeterian period, Compo period (Condratiev period) are long periods (about 50 years) are all based on technical shock waves, which are in line with the technical shock theory.

Combining Schumpeter cycle and Kangbo cycle, we divide the modern economic growth into the following cycles:

The first cycle : From 1787 to 1842 (55 years), marked by the use of steam engines, the invention and use of spinning machines, and the textile industry;

The second cycle : from 1842 to 1896 (54 years), marked by the steel technology and railway transportation industry;

The third cycle : from 1896 to 1946 (50 years), marked by the application of electricity, internal combustion engines, petrochemical technology, and the automotive industry;

The fourth cycle : From 1946 to 2008 (62 years), it is marked by the application of aerospace, nuclear energy, electronics, computer technology and the information industry.

This period is relatively long, strictly speaking it is two periods superimposed. After World War II, the civilianization of military technology, the application of aerospace, nuclear energy and other technologies promoted the continued prosperity of the postwar economy.

But this round of growth gradually weakened in the late 1960s, and the stagflation crisis of about ten years erupted in Europe and the United States in the 1970s.

Since 1983, the economy has gradually recovered, and information technology such as electronics and computers has begun to exert its strength.On a cyclical basis, it is more useful for us to predict the direction of the economy. For example, in the third economic cycle, when the diesel locomotive was accepted by the early public, the automobile industry entered a period of rapid development, and the number of household cars increased rapidly.

In the past three decades, China ’s family car ownership has increased rapidly, and today it has 170 units per 1,000 people. However, this data is only equivalent to the level of the United States in 1927, which is only about one-fifth of the current United States. (Thousands of people have 837 units) .

If you accumulate innovation acceptance (market share) , Rogers shows us an S-shaped curve, which is innovation diffusion S curve.

Figure: An example of the S curve of innovation diffusion, source: Rogers [4]

Schumpeter believes that technological diffusion is as unbalanced as technological innovation and full of uncertainty. However, Rogers captured the S-pattern of technology diffusion from a communication perspective. Technology diffusion reflects the economic impact of technology more intuitively than technological innovation. The S-curve of technology diffusion determines the gradual evolution of economic growth.

Technical invention to product innovation, to product mass production and large-scale popularization may be a long process. In 1982, the Italian economist Giovanni Dorcy inherited Schumpeter’s ideas, put forward the “technical paradigm-technology trajectory” theory, and discussed the relationship between economy and technology.

Technology follows the laws of nature, and economy follows the laws of economy. The intersection between technology and economy is manifested in the coupling of technological maturity and economies of scale. The ability to form economies of scale is a key consideration in developing, introducing, and promoting technology.

Take a car as an example. Electric cars and gasoline cars started at the same time. Both were born in the second industrial revolution.point. As early as 1863, Belgian Étienne Lenoir invented the hydrogen energy vehicle, 25 years before Mercedes-Benz gasoline vehicles. Since then, power technology has spread to the industrial sector, but electric vehicles have not yet spread. The main reason is that the maturity of the battery technology is not enough to trigger the economies of scale.

Let’s look at the diesel locomotive again. In 1860, the Frenchman Lenoir imitated the structure of a steam engine and designed and manufactured the first practical gas engine. The thermal efficiency of this gas locomotive is only about 4%.

In 1883, the German Daimler created the first vertical gasoline engine. In 1888, the German Karl Benz created the first gasoline car that could hit the road. In 1897, the German engineer Diesel developed the first compression ignition internal combustion engine (Diesel Engines) . This diesel engine improves the thermal efficiency to 26%. This is the famous Diesel engine.

The Diesel engine stimulates the nerves of the entire power industry. Daimler, Maybach, and Benz have gradually established petrol vehicle manufacturing plants.

However, the above conditions are not enough, because the cost of diesel locomotives was still high at that time-high car prices, expensive fuel, and high maintenance costs. ( For details, please refer to” Hundred Years of Energy Revolution History | New Energy Vehicles? ”

Figure: 1900Years of American Thousand-Person Cars, 2009-2009, Source: Intellectual Property

The large-scale application of diesel locomotives also depends on the following three conditions:

First, Ford invented the automobile manufacturing line.

Daimler and Maybach also started to manufacture gasoline cars in 1889, but at that time they sold for as much as 2,000-4,000 US dollars, with limited sales. In 1913, Ford Motor built the world’s first assembly line, which greatly improved the efficiency of car building and greatly reduced the cost of car building. The Ford Model T was originally priced at $ 825, equivalent to two years of income for ordinary American workers.

Old Ford’s slogan is “Make a car that everyone can afford.” By the time the production was discontinued in 1927, a total of 15 million Ford Model T vehicles had been produced, and the price had dropped to $ 260. At that time, ordinary American workers could buy a car for half a year’s income, and car ownership had reached the level in China today.

Second, the discovery of large oil fields, the price of oil fell sharply, the cost of gasoline vehicles fell rapidly, and the internal combustion engine began to be widely used in the industrial field.

The third is that European and American countries have gradually formed highway networks. The advantages of gasoline vehicles’ endurance capabilities have been demonstrated, the use value of automobiles has been enhanced, and highway networks have reduced maintenance costs.

So technology diffusion is often the result of synergies in economic systems. Of course, Rogers acknowledges that not all technologies are 100% accepted by the market, but this does not affect the S-shaped trajectory of technology diffusion. The spread of automobile in the United States was interrupted by World War II. However, with the economic recovery, the car ownership increased rapidly, and eventually reached saturation, showing an S-shaped curve.

We combine the S-curve of major technological diffusion in human history with the wavy lines of economic growth.

Figure: Technology diffusion and economic growth, source: The Intellectual Property Corporation

When basic innovation spreads on a large scale, the global economy enters a boom cycle. For example, after 1787, the British steam engine began to be applied to the textile industry on a large scale, the textile industry’s production capacity expanded significantly, and the economy ushered in the first boom cycle.

Every time basic innovation is widely accepted, technology dividends disappear, and new basic innovations are not recognized by the market, the economy enters a recession cycle. For example, beginning in 1837, the British cotton textile market was saturated, with severe overcapacity, and a number of excess crisis broke out.

Once the economy enters a recession and depression cycle, companies begin to reduce production capacity, reduce investment, close factories, fire workers, and lower prices to destock. At the same time, some mismanaged companies may go bankrupt. Other companies are trying to innovate technologies, develop new products, and create new markets and demands. The new technology diffusion curve has promoted the gradual recovery of the economy and ushered in a boom cycle again.

In this cycle, the technology diffusion curve is highly consistent with the economic growth curve.

In the fourth economic cycle, the proliferation of television, aircraft, petrochemicals, nuclear energy, polymers, and air transportation technologies has promoted the post-war world economic revival. In the 20th century, the family inventory of consumer electronics in the United States more intuitively reflected the trajectory of the proliferation of household appliance technology.

Picture: The diffusion map of basic innovation from 1940 to 2020, source: Hirooka, Chihshin Corporation

Picture: The use of American home appliances, source: Shao Yu [5]

In the era of globalization, the impact of technology diffusion on other countries’ economies is very large, and even decisive.

From a communication perspective, Rogers believes that the process of technology diffusion includes four links: awareness, persuasion, decision making, and confirmation. From the perspective of information characteristics, knowledge such as technology is external and learnable. From an economic perspective, technology diffusion comes more from exchange.

Technology learning and imitation in late-developing countries, as well as global market transactions, has accelerated the diffusion of technology worldwide.

Historically, every major global industrial transfer will produce a number of important manufacturing and foreign trade exporting countries. The United States and Germany were the beneficiaries of the diffusion of the first industrial revolution. The United States and Germany are late-developing countries. They learn, imitate, and introduce advanced textile technology and factory management from the United Kingdom. In the future, the United States and Germany became leaders and innovators of the Second Industrial Revolution.

After that, the first and second industrial revolutions in textile, railway, power, automobile, steel, petrochemical and other technologies spread worldwide. Japan after the Meiji Restoration became a beneficiary of this technological proliferation.

After World War II, Japan and Germany overthrew. The United States has transferred traditional industries such as steel and textiles to Japan and Germany, prompting rapid economic recovery in Japan and Germany, and manufacturing in Japan and Germany have gained development opportunities.

Pictures: Technology diffusion maps of the United Kingdom, the United States, Japan, and China, source: Hirooka, Chihshin Ltd.

In the 1960s and 1970s, trade friction between Japan and the United States intensified, and Japan, Germany andChina ’s domestic industry is saturated, and labor-intensive industries and technologies are gradually transferred to the “Asian Little Dragons” in Korea, Taiwan, Hong Kong, and Singapore.

After the 1980s, the “Four Little Dragons” in Europe and the United States, Japan, and Asia shifted labor-intensive and energy-intensive industries to the “Asian Little Tigers” in the Philippines, Thailand, Malaysia, and Indonesia, and China.

Benefiting from the global technology dividend, the four Asian dragons and four tigers have risen rapidly in the 1980s and 1990s. However, the good momentum of the Asian economy was ended by the 1997 Asian financial turmoil.

After the millennium, China has become the biggest beneficiary of this great industrial transfer and technology diffusion, and has achieved “Made in China”.

In the past forty years, China has widely absorbed the technologies of the first, second, and third industrial revolutions with the help of the tide of globalization.

Europe and the United States, such as textiles, steel, electromechanical, home appliances, automobiles, electronics, computers and other general technologies, assembly lines, as well as a series of knowledge and systems such as finance, banking, stocks, therapy, enterprises, basic science, etc., are transferred through industrial gradients. Way to introduce China. The global technological dividend is an important driving force for China’s sustained high growth.

Japanese scholars summarized the above industrial transfer as the “wild goose model” according to “The Wild Goose Industry Development Theory” by economist Akamatsu Akamatsu, that is, using Japan as the “leader goose”, and in turn went to the “four little dragons”, “four “Tiger” and mainland China relocation. Today, the picture of this wild goose migration continues to extend, and the industry is gradually shifting from China to Vietnam. (See “ Global industrial chain restructuring | Vietnam, is there any chance? 》 )

The global trajectory of technology diffusion is the realistic path of global industrial transfer and the internal logic of the rise of the great powers.

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Picture: Technology maturity curve and technology diffusion curve, source: Zhibensha

The technology maturity curve is also called the hype cycle, which reflects the technology diffusion curve in the media and investment fields. A new technology has just emerged. After the hype of the news media and academic conferences, investment expectations are rising rapidly, a large amount of speculative funds have poured into the capital market, and the “pigs on the wind” have risen, and the prices of various technology concept stocks have ballooned.

This is the phenomenon of overshoot, also called irrational prosperity. Typical cases are the railway bubble in 1857, the Internet bubble in 2000, and the blockchain bubble in 2017.

Mid-term technology diffusion: technology applications, financial innovation, scale effects.

At the time when technology was in the early public acceptance period, the technology was applied to the industry on a large scale, and economies of scale appeared. At this time, technology diffusion attracted funds into the real economy and stimulated financial innovation. Historically, whenever the economy enters a boom cycle, technology diffusion stimulates a large number of financial innovations. [6] .

The first boom cycle stimulated the widespread application of stock trading systems and modern banking systems;

The second boom cycle gave birth to modern capital markets such as trust and insurance;

The third boom cycle has spawned angel investment, venture capital, and industry funds;

The fourth boom cycle stimulated the rise of real estate securitization and investment banking, and gave birth to various financial derivatives.

Picture: 1940-2019 Economic Crisis and Technology Diffusion, Source: Hirooka, The Headquarters

In September 1873, the famous American investment bank Jay Cook Financial Company caused a butterfly effect due to railway speculation and bankruptcy, and 5000 commercial companies and 57 securities trading companies closed down.

After that, in 1882, 1890, and 1900, three financial crises were triggered by the railway investment bubble and stock speculation. After the famous global economic crisis of 1907, in 1929, it ushered in an unprecedented crisis and depression.

As Schumpeter said, every time the economy goes into recession, it means that new technological innovations are brewing, and economic recovery and prosperity are coming.

To save the crisis or reject a recession, governments often use financial means to maintain short-term growth. During the Great Depression, the US Federal Government promulgated the “Housing Loan Banking Act” to promote capitalization of real estate. (see “How is this world kidnapped by real estate?” ) < / span>

Since the 1970s, the Bretton Woods system collapsed, investment banks rose, and emerging technologies were in the ascendant. Real estate started the securitization road with the help of the financial wave.

After the millennium, the United StatesWith the economy declining in the Internet bubble crisis, the Federal Reserve implemented long-term extremely low interest rates to maintain economic growth.

At this time, the dividends of emerging technologies are gradually fading, and a lot of funds brought by the easing policy have poured into the real estate and financial markets, triggering the subprime mortgage crisis. The subprime mortgage crisis triggered the worst global economic crisis since 1929.

Now that humankind has entered the end of the fourth modern technology diffusion, what will happen to the world on the eve of the next round of technological innovation?

The technical dividend of the third technological revolution has disappeared, and economic growth brought about by technological diffusion is declining. At the same time, basic innovations such as artificial intelligence, unmanned driving, genetic engineering, biotechnology, and quantum computing have not yet entered the period of economies of scale, the driving force for economic growth is declining, and the western world has entered a low-growth zone.

From the perspective of economic growth rate, Europe’s economy has slowed down completely since the 1990s, and has now entered a low growth rate. Although the United States has taken the leadership of the information technology revolution, it has continued its economic downturn for about ten years after 2008.

Technology diffusion has promoted the industrial structure of East Asia to exhibit a geese structure, and the economic growth and decline of East Asia has also exhibited the geese structure.

“Leading Goose” Japan’s economy takes the lead. Japan started its high-speed economic catch-up during 1951-1973, achieving an average annual growth rate of 9.3% in 23 years, creating the “Putian River Miracle”. After the world oil crisis in 1974, the technological dividend declined, and the Japanese economy fell. From 1974 to 1990, GDP growth fell to 3.7%. After the 1990 economic bubble, Japan continued to experience low growth for nearly three decades.

Followed by the “Four Little Dragons” in Asia. The South Korean economy took off in the era of Park Jung Hee. From 1961 to 1996, it achieved a 36-year average annual growth rate of 8.8%, which is known as the “Hanjiang Miracle” in history. After the Asian financial crisis in 1997, South Korea’s economic growth began to decline. After 2000, the economic growth rate remained at about 5%; after the 2008 financial crisis, the growth rate further declined to about 3%.

Taiwan, China, during the 39 years from 1951 to 1989, was a period of rapid growth, with an average annual growth rate of 8.8%. From 1990 to 2010, the average annual growth rate was 5.1%, entering a stage of moderate growth. In recent years, similar to South Korea, it has entered a relatively low growth. [7]

(similar to 2017 blockchain) .

Finally, the future of the world economy depends on scientific and technological research and development and institutional construction. Nobel Laureate in Economics Phelps proposed the famous “golden law”. The Golden Rule tells us that by adjusting the ratio of labor to capital, we can continue to maintain technological progress and economic growth.

A truly outstanding company can withstand the temptation of a capital bubble, and can continue to invest in and care for talents, instead of putting employees in the jail for no reason in order to reduce costs.


[1] Millennium Economy of the World Economy, Madison, Peking University Press;

[2] Theory of Economic Development, Schumpeter, Commercial Press;

[3] History of Economic Growth Theory, Rostow, Zhejiang University Press;

[4] The diffusion of innovation, Rogers, Electronic Industry Press;

[5] The paradigm of innovation: Kang Bo, the world system and the rise and fall of great powers, Shao Yu, new wealth;

[6] Deep world change: a new round of technological revolution will reshape the global innovation landscape, Mi Lei, Zhao Ruirui, Hou Zipu, International Institute of Technology and Economics; < / p>

[7] German, Japanese, Korean, and Taiwan economic L-shaped growth, Ren Zeping, Zeping Macro;

[8] Know well, Gao Shanwen, Anxin Securities.