The book starts by arguing the world goes through similar cycles.
Each technological revolution leads to a massive replacement of one set of technologies, which in turn profoundly changes people. For instance, even common folk learn to invest in the market. This leads to an explosive period in financial markets.
Young, new actors shake up the established world, the world’s wealth is reallocated to more risky assets. The bubble inevitably pops, but the changeover is complete. There are new industries and the new technologies now exist as ‘common sense’.
Normally, regulation does not keep pace with innovation, and a new regulatory framework needs to be established for the new economy to enable it to function in a socially and economically sustainable manner. Until this is achieved, income disparity continues to widen in society until the financial breakdown.
If we can achieve institutional adjustment post-breakdown, the world enters into a golden age. Production takes the center stage, and what used to be big companies become oligopolies. The gains of the revolution are distributed, and the golden era ends when unfulfilled expectations lead to frustration and protest.
The book contends the world follows the following process every 50 or so years: Technological revolution – financial bubble – collapse – golden age – political unrest. There are three mechanisms in this sequence:
Clusters of radical innovations that form successive and distinct revolutions
Functional separation between financial and production capital
Greater inertia of socio-institutional frameworks when compared to techno-economic sphere