In this book, she makes an even more original and seminal contribution. She examines the interaction between that part of the economy commonly known as financial capital and the upsurge of new technologies from their first beginnings to the time when they predominate in the structure and behavior of the economy. In his major work, Business Cycles (1939), Joseph Schumpeter, whilst interpreting the major waves of economic growth and technological transformation as ‘successive industrial revolutions’, insisted that these clusters of radical innovations also depended on financial capital. In fact, more space is devoted to finance in his book than to technology but, rather strangely, his followers – often known as ‘neo-Schumpeterians’ – neglected this aspect of his work. With characteristic boldness, Carlota Perez has attempted to fill this gap. The Internet ‘bubble’ has made the gap especially apparent but she began her work long before this. Like Schumpeter, she believes that the early upsurge of a new technology is a period of explosive growth, leading to great turbulence and uncertainty in the economy.

Venture capitalists, delighted at the new possibility of very high profits first demonstrated by early applications (aptly designated by Carlota Perez as the ‘big-bang’) rush to invest in the new activities and often in new firms.

However, the uncertainty which inevitably accompanies such revolutionary developments, means that many of the early expectations will be disappointed, leading to the collapse of bubbles created by financial speculation as well as technological euphoria or ‘irrational exuberance’. The explosive upsurge of the new industries and firms takes place within an environment still dominated by the ‘old’ institutions, so that this is inevitably a time of great contrasts, designated by many economists as a phase of ‘structural adjustment’. Preface chapter title xi Carlota Perez puts the accent on the process of propagation of the new technologies and calls it the ‘installation period’. She further divides it into two phases: ‘Irruption’ and ‘Frenzy’.