Smart societies shape their future by understanding the potential of each new technological revolution and designing how it will be deployed. But the in order to establish itself it needs to replace the . And that’s not easy because a lot of people LOVE the old. They made their success, their wealth, their lives based on what used to be the new, but it’s already old. new old Now it’s obsolete. This natural from the old market and the government, plus the difficulty in assimilating these changes makes each great revolution go through bubbles and crashes. resistance How to identify a revolution Revolutions are created by new infrastructures that allow Everything from canals to railways, to steamships, to highways and electricity, to the internet. wider and deeper market penetration at decreasing costs. The rich, educated and young tend to be the pioneering adopters, with increasing layers of society copying their example. Phase 1 — The excitement At its birth, technological revolution attract investments from . These investors fund the technological transformation. They back the new startups, the , the excitement. They encourage experimentation with new business models until it decouples from the real but obsolete economy. private investors crazy ones As mentioned above, during this period there is intense polarization between the new and the old. The old represents a mature, conservative market while the new adapts a free market ideology, in order to encourage the abandonment of the old way of doing things. Phase 2 — Wild west 🌵 Now, imagine being in a “wild west” like investment environment. An enviroment with tons of funds and flexibility to speculate; where you are and government involvement. free from regulations Eventually, everything moves closer and closer to financial instruments, huge returns that lead to more speculation. All creating a “paper” economy. casino-like Besides that, this investment-frenzy phase ends in over-investment in a relatively . small market Both the casino-like character and the over investment in a small market end up in a major market . And eventually, every bubble bursts… bubble A few examples include the that led to the , the , the . “Roaring Twenties” “Wall Street Crash of 1929" dot com bubble of 2000 subprime mortgage crisis in 2007 In a much smaller scale the that we just experienced in 2018. bitcoin and ICO bubble Phase 3 — Recession, the good and the bad news The good news is that after the frenzy and thanks to private investments, the basic infrastructure of the new technology has been , ready for full growth potential across the entire economy. installed The bad news is that immediately following the , private investors have become and are not ready to fund the expansion. crash risk averse Also, a recession period always follows where hopelessness, inequality and unemployment is observed. Phase 4 — Government steps in As a result, after the major collapses, the state has historically stepped in to play an active role in favour of investment and growth. This is where were see regulations and (the old money) coming in. institutional money In this phase, the government gives a that spreads the new economy across the globe. direction Repeat. You can read more about technological revolutions and bubbles here: by Carlota Perez. The advance of technology and major bubble collapses: Historical regularities and lessons for today