ABSTRACT

This chapter considers the implications for investment and employment of two major dynamic forces at work in the world economy—what one have come to call the Fifth Kondratieff Upswing and the Fourth Industrial Revolution. The Fifth Kondratieff Upswing began at the close of 1972 with an explosion of grain prices that was followed by a quadrupling of oil prices. In both cases exogenous events played a role: respectively, the poor harvests of 1972-1973 and the Middle East war of October 1973. The chapter describes the Fourth Industrial Revolution. For this analysis we are in the world of Joseph Schumpeter's theory of the Kondratieff cycle rather than mine; although contemporary Schumpeterians, unlike the master, forget that Schumpeter was trying to explain the price, interest rate, and money wage data on which Kondratieff initially focused. Instead, they seek to associate innovational surges with periods of high growth rates and periods of growth deceleration with a relative lack of new, innovational industries.