We are undoubtedly in a time of great change. The global response to the COVID-19 pandemic has caused sudden economic shocks and immense uncertainty. But where will this turbulent year lead us? In light of the sweeping disruptions we are currently experiencing, it’s interesting to review the history of economic evolutions.
The term evolutionary economics, coined by Thorstein Veblen (1857-1929), describes a model of the economy as a dynamic source of constant change, adaptation, chaos and revival. Veblen believed that psychological factors explained economic behavior better than rational choice theory. These factors can include individuals’ fears, local customs and business motivations aside from profit.
One of the most prominent examples of economic change is the industrial revolution. Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, argues that the industrial revolution took place over distinct periods:
- The Age of Mechanical Production (describing the changes that occurred in the British textile industry in the 18th century because of Thomas Newcomen’s invention of the first practical steam engine)
- The Age of Science and Mass Production (the label for the widespread mechanization of agriculture, textile manufacturing and power generation in the 19th century, starting in the United States)
- The Digital or Technological Revolution (where semiconductors and computing advances beginning in the late 1950s led the shift from analog to digital technology, including the Internet)
Schwab states in his book The Fourth Industrial Revolution that we are currently in the fourth period of industrial revolution. He describes this kind of revolution as the arrival of “new technologies and novel ways of perceiving the world that trigger a profound change in economic and social structures.” As the novel coronavirus pandemic continues to unfold, we are facing some of the most profound changes in our lifetimes.
What might we call this period? Some of our ideas have included the Great Isolation, the Virtual Presence Era and the Online Revolution. If you have a better suggestion, let us know.