Since the late 1700s, there have been five great waves of economic and technological development, each lasting about half a century. Each one produced a surge of new products, new employment, whole industries, and strong economic growth. They also resulted in the development of new means for transporting energy, information, goods, and people more rapidly, inexpensively, and across farther distances than ever before.

These five “60-year cycles of capital” are typically referred to as the Kondratieff Waves, named after Russian theorist Nikolai Kondratieff, who first identified them. Kondratieff observed that capitalist economies move through recurring cycles of boom and bust. Austrian-American economist Joseph Schumpeter later coined the term “creative destruction” to describe the necessary contractions and expansions within these cycles that result in long-term growth.

Perhaps nowhere are the cycles explained and analyzed better than in the book Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages,¹by economic historian Carlota Perez, a senior research fellow at Cambridge University.

The first wave, the Industrial Revolution, began in 1771, introducing the age of great factories and mechanization. During this wave, canals became a newly efficient means of transportation.

The second wave, beginning around 1829, took place in England when the coal-powered steam engine was perfected and railways were introduced.

Heavy engineering ushered in the third wave starting in the 1870s. The fields of mechanical and civil engineering experienced rapid expansion. The introduction of cheap steel, produced by the Bessemer process, led to the development of trans-continental railroads, fast trans-oceanic steamships, and the construction of tunnels and bridges that were previously unthinkable.

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This was also the period when the telegraph came into widespread use. It was also the first time globalization was introduced as a model for commerce. International trade was typified by Argentina, Australia, and others in the Southern Hemisphere selling meat to northern markets using refrigerated ships.