A couple of months ago I wrote about Kondratieff cycles, the long-run waves of innovation that can be observed since in the industrial revolution. Many believe that we’re entering a sixth, which will be a transition towards sustainable technologies. Here’s a graph that describes the same phenomenon much more neatly. It’s from the Ellen MacArthur Foundation, which campaigns for a ‘circular economy’.
One of the notable things about these waves of innovation is that they created enormous wealth and social progress in the places where they started. From early industrialization in Britain to consumer electronics in Japan, the countries that capitalized early on the emerging technologies reaped economic benefits for an entire generation or more.
The lesson for business and government is that if we are entering a 6th wave, you ignore renewable energy and cradle to cradle design at your peril. We might decide not to invest, not to commit funds to research and development, but others will. I can only really speak for British politics, but current government policy (or lack of it) is distinctly lukewarm towards sustainable energy and production. That could turn out to be a very big mistake.
This wave looks doubly important, because many of the previous technologies are now hitting natural limits. Raw materials such as metals aren’t necessarily running out, but demand has increased and they are much more expensive. The price of fossil fuels is rising and will continue to do so. Economies running an old industrial model are going to find their inputs are increasingly expensive, cutting into profits. Those investing now in resource productivity, re-use, leasing, and smart design are going to have a major headstart.
The Earthbound Report 
Here’s hoping that this truly is the wave of the future!
Interesting, but I’m surprised you’re keen on this, for 2 reasons (well, the first reason is just a few questions!):
1. What unit is ‘innovation’ measured in? I understand the way Kondratieff measures ‘prosperity’, but I don’t understand the measurement of ‘innovation’. I’m not sure they are the same phenomenon (even if it’s graphic is neater)… Also, why does each cycle start from a higher point than the last one? Just seems quite misleading…
2. Isn’t the whole thing built on assumptions about growth that you would normally question?
Both good questions. The answer to the first is that I’m kind of conflating two different approaches here. They both attempt to describe the same thing, one from an economics point of view and the other from the technological side. Kondratieff looked at the big steps forward in economic growth and traced it back to technology. This graph starts with the technologies themselves, the inventions and discoveries and suddenly emerge together, bounce off each other and spawn whole new areas of enterprise.
I don’t suppose you can measure innovation in any objective sense, but you can see broad movements in technology. Each one builds on the breakthroughs of the last, which is why the graph pictures them starting higher up. Since you also have a higher knowledge base to work from, the take-up of new technologies is accelerating too.
As for the second question, yes, much of the thinking about long run economic waves is by investors trying to work out where to put their money. I think it’s important because the technologies we’re talking about here – renewable energy, cradle to cradle design etc – are prerequisites for a sustainable economy.
We’re going to have a postgrowth economy one way or the other. Either we’re going to design it, by coming up with interest-free forms of money and circular industrial processes, or we’re going to run the current model until it breaks. Recognising and investing in this ‘6th wave’ is one of our best shots at the former.
I should just add that the whole idea of these waves is contentious and difficult to prove, so it’s not something I’d stake everything on. I just think it’s one useful way of summing up where we’ve been and where we might be going.
I am not sure how all this is going to play out – but if I had money to invest and knew how to buy shares, I imagine Chinese solar seems to be one of the possibilities of where this “next wave” may be emerging from.
Exactly, the Chinese have pushed ahead with this stuff while we’ve been dragging our feet. The renewable energy revolution looks like it will be down to Chinese inventions, particularly in the solar field you mention.