1. ICT and GREEN
A NATURAL PARTNERSHIP
TO NURTURE
Shaping a sustainable globalization
and redesigning the ‘good life’
Prof. Carlota Perez
Universities of Cambridge, Tallinn and Sussex
CUD Global Conference September 2008
Amsterdam, September 23-24

2. Is global growth
environmentally sustainable ?
Is full globalization compatible
with the so-called “American way of life”?
Why do so many people around the world
think
that the “American way of life”
is the best?
Could there be better?
Is ICT part of the problem or
part of the solution?
UNDERSTANDING
TECHNOLOGICAL REVOLUTIONS
AND PARADIGM SHIFTS
CAN HELP ANSWER THOSE QUESTIONS

3. Some crucial relationships to examine
TECHNOLOGY SOCIETY
MARKET
PROFILE
The historical analysis reveals a process of mutual shaping
WITH MAJOR MARKET CHANGES EVERY HALF-CENTURY

4. FIVE TECHNOLOGICAL REVOLUTIONS IN 240 YEARS
Britain 1771 The ‘Industrial Revolution’ (machines, factories and canals)
Each begins in a core country…
Britain 1829 Age of Steam, Coal, Iron and Railways
Britain
USA 1875 Age of Steel and Heavy Engineering (electrical, chemical, civil, naval)
Germany
USA 1908 Age of the Automobile, Oil, Petrochemicals and Mass Production
USA 1971 Age of Information Technology and Telecommunications
USA?
Europe?
Both? 200?? Age of Biotech, Bioelectronics, Nanotech and new materials?
Other?
Each takes 40-60 years to spread across the world and reach maturity

5. Why call them revolutions?
Because they transform the whole economy!
NEW INDUSTRIES and NEW PARADIGM FOR ALL
New generic technologies,
A powerful cluster infrastructures and
of visible new and dynamic organizational principles capable
industries of modernizing
and infrastructures the existing industries too
Explosive A quantum
growth jump in
and structural innovation and
change productivity
potential for all
A massive change in the direction of change
CHANGING THE OPPORTUNITY SPACE AND RESHAPING SOCIETY

6. Each technological revolution provides a new inter-related set
of life-shaping goods and services at ‘affordable’ prices
The British ‘middle classes’ establish
Age of Steam, Coal, VICTORIAN an industry-based urban lifestyle
iron and railways LIVING different from that of the country-based aristocracy.
It spreads to new upper classes elsewhere
Age of Steel and British, European and American
Heavy Engineering THE BELLE EPOQUE upper and middle classes establish
First Globalization a cosmopolitan lifestyle
spreading to the upper classes of the world
American upper and middle classes establish
Age of the Automobile, a suburban energy-intensive lifestyle
Oil, Petrochemicals THE AMERICAN spreading to the working classes
and Mass Production WAY OF LIFE
of the advanced countries
and to the middle classes of the developing world
Will the affluent educated classes of the developed
?
Age of Information SUSTAINABLE and emerging countries
Technology and GLOBAL establish an ICT-intensive knowledge society
Telecommunications LIFESTYLES with a variety of environmentally friendly
lifestyles and consumption patterns???
Each new style becomes the embodiment of progress and comfort
shaping the “good-life” desires and dreams of the majority

7. The emergence of the ‘American Way of Life’
as the paradigm shift from the 1910s…
FROM ENERGY-SCARCE LIVING TO ENERGY-INTENSIVE HOMES AND MOBILITY
Energy is expensive and often inaccessible Energy is cheap and its availability unlimited
Trains, horses, carriages, stage coaches, Automobiles, buses, trucks,
ships and bicycles airplanes and motorcycles
Local newspapers, posters, theaters, parties Mass media, radio, movies and television
Ice boxes and coal stoves Refrigerators and central heating
Doing housework by hand Doing housework with electrical equipment
Natural materials (cotton, wool, leather, silk..) Synthetic materials
Paper, cardboard, wood and glass packaging Preference for disposable plastics of all sorts
Fresh food bought daily Refrigerated, frozen or preserved food
from specialized suppliers bought periodically in supermarkets
Urban or country living and working Suburban living separate from work
…all strongly aided by advertising, business strategies
and government policies

8. THE CURRENT TECNO-ECONOMIC PARADIGM SHIFT
beginning in the 1970s
FROM THE LOGIC TO THE LOGIC
OF CHEAP ENERGY (oil) OF CHEAP INFORMATION
for transport, electricity, its processing
synthetic materials, etc. transmission and productive use
Huge potential
Excessive use for savings in
of energy, energy and materials
materials and
tangible products Preference
for intangible value
Each paradigm opens different new routes for making profits
as well as for achieving socially desirable goals

9. Three of the many new directions of the current paradigm shift
Mass production ICT- Flexible production
Adaptability (including upgrading as change)
Niche markets; ‘the long tail’
HOMOGENEITY DIVERSITY
Potential for a great variety of lifestyles
on a common ICT platform
Global economy
with differentiated
NATIONAL ECONOMIES GLOBALIZATION
national, supranational
and local spaces
Measurement, monitoring and control
CAPACITY FOR Recycling and refurbishing
UNAVOIDABLE
ENVIRONMENTAL Conservation; closed-loop systems
ENVIRONMENTAL DAMAGE PROTECTION Avoiding pollution and waste
But the shift to the new opportunity space
has not fully happened yet

10. THE NEW PARADIGM IS STILL WRAPPED IN THE OLD
Mass production disposability and high use of energy and materials is still with us
It’s just like the first automobiles
that began looking like horse driven carriages
An automobile in 1898 Reproduction: L.De Vries. 1972
WHY? Because cheap oil and cheap Asian labor
favored the stretching of the old consumption patterns in the crucial 1990s

11. CAN THE NEW PARADIGM PREVAIL?
YES
IF economic circumstances change
IF it becomes an aspiration of the majorities
IF it is a positive sum game
between business and society
Sustainability must at the same time…
“create economic opportunities and
improve the quality of life”
President Bill Clinton
CUD 2008 Conference, San Francisco
…and
IF governments become proactive
and define a new playing field
clearly tilted towards “green”

12. Quality of life is measured by fulfilment of values and aspirations
Those aspirations are historically determined
by the way society shapes each successive technological potential
The “luxury” life: ENABLERS
values and aspirations under
THE MASS PRODUCTION PARADIGM
• Low cost of products
• Consumer credit
• Unemployment insurance
• Brand new is better than old • Official trade unions
• Bigger is better than smaller • Savings and loan banks
• Low cost housing
• More is better than less
• Easy mortgages
• Synthetic is better than natural
• Fabricated is better than hand-made OPINION SHAPERS
• Disposable is comfortable
• Role models
• Leisure is rest (not exercise)
• Advertising
• Shopping is a leisure activity • Movies, TV
• If you don’t keep up with the Jones’, • Relative prices
you are falling behind • Marketing strategies

13. The shift to “ICT-green”
consumption patterns is possible
IF NOT BY GUILT AND FEAR
BUT BY DESIRE AND
ASPIRATION
Through shaping and enabling
a change in our notions of luxury and the “good life”
BUT IT MUST HAPPEN
FIRST AND VISIBLY
IN THE ADVANCED COUNTRIES

14. The notions of luxury and good taste
emerge at the top of the income scale
and spread by imitation
PART OF THE PARADIGM SHIFT IS ALREADY HAPPENING
• Small is better than big
• Natural materials are better than synthetic
• Multipurpose is better than single function
• ‘Gourmet’ food is better than standard
• Fresh organic fruit and vegetables are healthier
• Exercise is important for well being
• Global warming is a real danger
• Not commuting to work is possible and preferable
• Solar power is luxurious
• Internet communications, shopping, learning
and entertainment are better than the old ways , etc.
BUT RELATIVE PRICES AND WIDER INTERESTS HAVE TO FOLLOW! WILL THEY?

15. Major transformations to expect (or to participate in)
Energy systems
Freight transport & distribution
RISING COSTS OF ENERGY, New materials and recycling
MATERIALS AND TRANSPORT Packaging and conservation
Waste disposal
POTENTIAL OF INFORMATION
AND COMMUNICATIONS Education
TECHNOLOGIES
Health and well being
GROWING Sports and leisure
ENVIRONMENTAL THREATS
Cultural activities
Third Age living
Architecture and urban planning
Etc. etc.

16. An example of future innovation paths
THE IMBALANCES IN THE GLOBAL LOGISTICS INFRASTRUCTURE
5th surge technologies 5th surge paradigm
deeply transforming modernizing
4th surge telephony 3rd and 4th surge technologies
DIGITAL
TRANSPORT
≠ PHYSICAL
TRANSPORT
Rapidly expanding Slowly expanding
Ultra efficient Modernizing
Cost decreasing Cost increasing

17. THE CURRENT ROUTE TO GLOBALIZATION IS AN EXPLOSION IN FREIGHT TRAFFIC
Since the 1990s goods trade grows more than twice as fast as production
Global merchandise production and trade in volume 1950-2004
Micro-processor
Micro- NASDAQ
Big-bang
Big- collapse
350
Deployment 4th Installation 5th T.P. World Merchandise
Exports
300
Index 1980 = 100
250
200
World Merchandise
Production
150
100
50
Source: WTO
0
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
1950
1953
1956
1959
1962
1965
Massive innovation will be needed
to cope with (or to avoid) the consequences

18. IN THE CURRENT PATTERN OF GLOBALIZATION
THE LION’S SHARE OF THE NEW TRADE IS IN GOODS; NOT IN SERVICES
U.S. Exports and Imports of Goods and Services
(current billions US$), 1970-2002
1400
Installation 5th TP
1200 Goods Imports
1000
Billion US$
800
Goods Exports
600
400
Services Exports
200 Services Imports
Source: WTO
0
1982
1994
1986
1990
1998
1974
2002
1970
1978
MUCH INNOVATION WILL HAVE TO COME FORTH
TO MAKE GLOBALIZATION ENVIRONMENTALLY FRIENDLY

19. THE NEW INNOVATION PATHS IN DEPLOYMENT
Information and logistics infrastructure
Business
Digital models
networks
Re-design Coordination
Post-sales
ICT maintenance Packaging
User
Etc. participation
Service at Handling
destination PHYSICAL
Technical PRODUCTS
services Energy
Land/water/air
Storage Transport
Distribution
Materials
systems
Environmental
…and ICT management
is the most powerful complement
to advance in the new directions!

20. A sustainable development path
for a positive-sum global future
is possible
BUT IT WILL NOT HAPPEN AUTOMATICALLY
Even with the likely price changes,
uncertainty would refrain investment
THE MARKET CANNOT DO IT ALONE
WE ARE PRECISELY
AT THE HISTORICAL MOMENT
WHEN THE STATE
MUST COME BACK INTO THE PICTURE
To understand this statement
we must look into
HOW TECHNOLOGIES PROPAGATE

21. EACH TECHNOLOGICAL REVOLUTION PROPAGATES IN TWO DIFFERENT PERIODS
The first half sets up the infrastructure and lets the markets pick the winners
the second half reaps the full economic and social potential
INSTALLATION DEPLOYMENT
INSTALLATION DEPLOYMENT
Turning
Point
Recessions, institutional recomposition and role shift
“Creative destruction” “Creative
Learning the new construction”
Degree of diffusion
of the new technological potential
unlearning the old Led by
A great production capital
market experiment Applying the paradigm
Led by to innovate
financial Major across all sectors
technology and to spread
capital bubble
Ending in the social benefits
a stock market more widely
crash Until maturity
and exhaustion
??? Time
Next
big-bang 2O - 30 years 2O - 30 years big-bang
We are here

22. The historical record: bubble prosperities, recessions and golden ages
TURNING
INSTALLATION PERIOD POINT DEPLOYMENT PERIOD
Bubble Golden Age
1771 Great
Britain Canal mania 1793–97
1793–
British leap
1829
Britain Railway mania 1848–50
1848– The Victorian Boom
1875 London funded global market
Britain / USA Belle Époque (Europe)
infrastructure build-up 1890–95
1890–
Germany (Argentina, Australia, USA) “Progressive Era” (USA)
Europe
1908 The roaring 1929–33
1929– Post-war
USA twenties USA Golden age
1929–43
1929–
1971 Telecom mania, Internet
USA emerging markets 2000/7–? Sustainable global
2000/7–
and NASDAQ knowledge-society ”golden age”?
Each Golden Age has been facilitated
by enabling regulation and policies for shaping and widening markets

23. The sequence of propagation has four phases and a break
20 – 30 years 20 – 30 years
INSTALLATION PERIOD DEPLOYMENT PERIOD
Degree of diffusion of the technological revolution
MATURITY
SYNERGY
TURNING POINT
Market
saturation
Financial
and
Bubble
Technological social
explosion Golden Age unrest
FRENZY
IRRUPTION
Time
big-bang Institutional Next
Crash recomposition big-bang

24. And the focus and intensity of innovation change with each phase
Focus of inovation in Focus of inovation in
INSTALLATION DEPLOYMENT
TURNING
Irruption Frenzy POINT Synergy Maturity
NEW FINANCE ALL INSTITUTIONS All industries
TECHNOLOGY NEW ALL INDUSTRIES Future industries
INDUSTRIES TECHNOLOGY AND ACTIVITIES […and social rebels]
Finance INDUSTRIES
and modernization
of the old ones
The logic of the techno-economic paradigm
guides innovation in each area
as the focus shifts among the actors and the agents

25. How much
institutional innovation
was put in place
to enable the full deployment
of the mass production paradigm
and bring on
the Post War Golden Age?
?

26. POLICIES TO FAVOR AND EXPAND DEMAND FOR MASS PRODUCTION
Welfare State:
Progressive income tax for redistribution,
Unemployment insurance and pensions (safety nets)
Universal access to electricity, roads, telephone, education, etc.
Facilitating “mass consumerism”:
Consumer credit systems
Reduction of the labor day, week and year,
Institutionalized labor unions (for salary increases),
Accessible savings, loan and mortgage systems for
suburban housing, etc.
Widening government demand:
Increasing taxes for State expenditure
Defense, mass education and health systems,
Infrastructures, public services, etc.
Marshall Plan
For reconstructing European production and
consumption capacity
The welfare state and the facilitators of the suburban living model
incorporated the workers into the middle income consumer layers

27. And further institutional innovation
regulated international trade and finance and kept relative peace
• Bretton Woods (US dollar backed by gold)
• International Monetary Fund (IMF)
• World Bank
• General Agreement on Tariffs and Trade (GATT)
• Political independence for colonies
• The United Nations
• The Cold War
• Etc.
We will need equivalent imagination and determination
to innovate towards the Global Knowledge Society Golden Age

28. Setting up the framework for a sustainable knowledge society
THE LEVELS
Global THE ACTORS
National Government
Regional Business
THE GOAL
Local Civil society (especially
A “green economy”
A global NGOs)
“man-on-the-moon” Universities
project Media
THE MEANS
Building a widespread consensus
Innovative policies
to change market conditions
A tilted playing field on a global scale
To be effective, the changes and the policies must be clear, reliable,
enforceable, long-term and commanding widespread agreement

29. INNOVATING
TO SHIFT THE DIRECTION OF INNOVATION
WILL NOT BE EASY
Due to more than half a century
of the mass-production cheap-energy paradigm
habits, previous investments and externalities
are all in favor of high carbon technologies
A “level playing field”
for high carbon and low carbon competitors,
will require changing it
strongly in favor of low carbon

30. TILTING THE FIELD BOLDLY IN FAVOR OF “GREEN”
ENHANCE MODIFY
THE SOCIO- Business decisions: THE POLICY
ECONOMIC CONTEXT
CONTEXT INNOVATION
LOCATION Incentives:
INVESTMENT Cost offsets
Relative costs Etc. tax breaks, etc.
and prices
Disincentives:
Other costs: Consumer decisions: Taxes, tariffs,
Time, risk, etc. charges, etc.
EXPENDITURE
Rules and
Public attitudes LOCATION
regulations:
and opinions BEHAVIOR
Recycling, caps,
ETC.
etc.

31. John Chambers, Cisco CEO
CUD 2008 Conference, San Francisco
“It is important to have supportive governments…
“We must all collaborate to paint a vision
and realize a new architecture…
I wouldn’t have said this ten years ago”
The pure market ideology and practice
already played its role
facilitating the installation of the ICT paradigm.
Today, market fundamentalism
is as much an obstaclefor full deployment
as State fundamentalism was for Installation before
THE TIME IS RIPE FOR THE STATE
TO COME BACK INTELLIGENTLY
AND PROMOTE A CONSENSUS VISION

32. The answer to whether
sustainable global growth is feasible
is, therefore, YES!
But neither pure “free markets”
nor simple “environmentalism”
will get us there
The innovation potential of the ICT paradigm
can and must be collectively redirected
towards new patterns
of environmentally friendly well being
and a new profit-making dynamic for business
But it depends on us
AND THE TIME TO ACT IS NOW!

33. THANK YOU!