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Chapter 33 The New Economy and Business Cycles We are now living through an industrial revolution of
immense scope which has diverse implications. This time the pervasive
and radical nature of the wave of technical change is less controversial
then in previous events of the kind, although its real dimension and impact
are necessarily discussed. Even those who have disputed the revolutionary
character of earlier waves of social and technical change have often little
difficulty in accepting that a vast technological revolution is now taking
place, based on the electronic computer, micro-electronics and the Internet.
Alan Greenspan, among so many, has spoken frequently of the ‘new
paradigm’, referring specifically to computers, telecommunications
and the Internet as the source of the remarkable recent spurt of growth
in the US economy. These industries were growing in the United States
in the 1990s at a very high rate and accounted for the greater part of
growth in the entire economy. But the same factors accounting for growth
generated the largest speculative bubble in the history of the US, based
on the ‘irrational exuberance’ of the stock market in response
to the immense potential of the Internet and other new technologies, and
its collapse led consequently to depression since the spring of 2000. |