ECONOMICS
Throughout the Industrial Revolution, there was a common expectation of more or less continued economic growth, a concept largely foreign to previous epochs in which subsistence and extremely modest growth were the norm. Average annual growth rates throughout the industrial world during this period, particularly in the United States, rose from virtually nonexistent to about 2 percent—leading to a doubling of the average standard of living every 36 years.
The engine of this rapid growth was technological innovation. New technologies provided new avenues for investment and growth; capital flowed heavily from one technology to another, and often from one location to another in accordance with technological developments. Innovations—be they new products, industrial processes, communications, or transportations—generally proved a boon to certain economic sectors into which investment capital flowed. Over time, the applications and effects of those innovations and investments proliferated and spread throughout the economy, but with inevitably diminishing returns for the capital investment; eventually, capital must seek out new technologies and new avenues for investment.
By virtue of annual growth rates, if one were to locate the true onset of the Information Revolution immediately following the Cold War with the dissemination of the Internet to critical mass, one would find similar characteristics. For example, the economic boom of the 1990s saw annual growth rates in the United States leap above 3 percent for the first time in decades, simultaneously keeping inflation in check and generating healthy profits for continued investment. The slowdown in the U.S. economy of the early 2000s gave pause to some commentators, but it remained to be seen how much of a setback that downturn would prove to be; while some skeptics argued that the slowdown proved that the 1990s boom was an anomaly based on speculative bubbles, others argued that the recession was a mere market adjustment amidst a profoundly new economic era.
The Information Revolution also features a new era of economic globalization as geography gradually disappears as a barrier to economic activity. The world economy has undergone enormous globalization processes before, particularly in the late 19th and early 20th centuries, but the process was continually ebbing and flowing with the winds of political and social change. The level of globalization fostered by the Information Revolution, however, is altogether unprecedented in human history, as the speed with which information, transactions, and capital can travel virtually anywhere in the world render distance almost obsolete, at least in certain key economic sectors.
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