Perez, a Venezuelan-British economist, studies the relationship between technological change and financial markets over long time periods. Her framework identifies five technological revolutions since the 1770s: the Industrial Revolution, the Age of Steam and Railways, the Age of Steel and Electricity, the Age of Oil and Mass Production, and the Age of Information and Telecommunications.
Each revolution follows the same pattern. In the “installation phase,” a new technology emerges and financial capital floods into it, creating a speculative bubble. The bubble overinvests in infrastructure (railways, internet cables, etc.) that the technology needs. Then the bubble crashes. After the crash, during the “deployment phase,” the technology spreads broadly through the economy, and the overbuilt infrastructure gets used productively. This is when the “golden age” happens: widespread prosperity built on the new technology.
The pattern maps cleanly onto the dot-com bubble and its aftermath. The 1990s installation phase produced massive overinvestment in internet infrastructure (fiber optic cables, data centers, web companies). The 2000 crash wiped out the speculative excess. The 2000s and 2010s deployment phase saw the actual transformation of commerce, communication, and media by the internet, using the infrastructure the bubble had funded.
Perez wrote the book in 2002, and her framework has become increasingly cited by tech investors and founders. Marc Andreessen, Patrick Collison, and Chris Dixon have all referenced it. The theory does not predict specific outcomes, but it provides a useful mental model for understanding where we are in a technology cycle and what comes next.
For founders, the practical value is in understanding that bubbles, while destructive to individual investors, are structurally useful for technology deployment. The infrastructure built during speculative booms does not disappear when the bubble pops. It becomes the foundation for the next phase of real value creation.
At about 200 pages, the book is short and academic in tone. It is not a casual read. The diagrams and frameworks require concentration. But for founders who want to understand the long-wave dynamics of technology and capital, it is one of the most useful books available.
