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The Fifth Wave?

by Carl Abbott on Aug 27, 1997

Is something odd happening to the American economy?       

Alan Greenspan, chairman of the Federal Reserve System, recently uttered a typically ambiguous Greenspanism: “We do not now know … whether current developments are part of a once-or-twice in a century phenomenon that will carry productivity trends nationally or globally to a new higher track, or whether we are merely observing some unusual variations within the context of an otherwise generally conventional business cycle expansion.”

The question is: What’s “conventional”? Does it mean three-to-five-year lturists watched the heavens and built monuments to mark the vernal equinox, the first day of spring, a time of planting, a time of rejuvenated hope. The puebloans of the American Southwest marked the beginning of spring, and the other three seasons, by tracking the path of the sun. They calibrated their planting of corn and other crops with the arrival of spring. In rituals lost in time, their shamans painted and chiseled images on stone, petitioning their spirits for fertility and abundance.

Togies, followed by two decades of contraction and economic crisis. During the years of crisis and depression, old products and industries have fallen by the wayside as businesses explore new ideas, inventions, and markets.

  • The first expansion centered on steam engines and textiles from the 1780s until the 1810s — what textbooks once called the Industrial Revolution.
  • Steel, railroads and steamships drove the second wave from the 1840s through the 1860s (and incidentally helped the United States achieve economic independence from Europe).
  • In the third wave, from roughly 1895 to 1925, scientifically sophisticated manufacturers developed uses for electricity and chemicals, with products ranging from electric lighting to automobiles, using refined petroleum.
  • The fourth wave started in the 1940s, following the Crash, the Depression and World War II. Business found mass markets for earlier innovations, such as consumer appliances, and new opportunities in electronics, telecommunications, and aerospace.

In the United States the fourth wave fueled the growth of the Sunbelt and produced the “Great Boom” of 1945-1973, which conditioned an entire generation to expect continued prosperity. Elsewhere it shaped the “miracles” of German and Japanese recovery from the ravages of war.

The stock market boom may now be a signal that we are finally emerging from a fourth period of readjustment. The last two decades have been an economic trough. We have endured oil shocks and stagflation, the erosion of labor unions, declining home ownership rates, the evaporation of old industries, corporate reorganization, and the challenge of new overseas competitors.

Past patterns suggest that the United States and the world may be entering a new generation of growth. 

What will this fifth wave look like?

It will mean new forms of organization such as flexible  manufacturing, downsized corporations, telecommuters, transient and temporary workers whose skills are bought and sold on the short-term market. The problem is the same as it was for railroad executives in 1860 or industrialists in 1920 — how to manage expanding enterprises without becoming immobilized in bureaucracy.

For businesses in 1997, the issue is the old challenge of productivity — how to respond quickly to changing opportunities and serve more customers and larger markets with fewer employees.

The fifth wave will also exploit the full potential of technology developed in the previous era. A comparison with the impact of the automobile is apt. Americans certainly fell in love with automobiles in the 1910s and 1920s. But they didn’t truly incorporate sedans, trucks and station wagons into all aspects of daily life and work until the 1950s and 1960s brought three-car families, superregional malls, drive-by eating and drive-up banking.

In the same way, we certainly turned electronic data processing into a major industry in the 1950s and 1960s, to the joy of anyone who invested in IBM. But perhaps only in the next century will we be ready to put Intel inside of everything we own and do and also exploit the information capacity of bioengineering.

Transitions require new political ideas as well as economic innovation. Leaders who are good at managing prosperity are often clueless about dealing with crisis (Herbert Hoover comes to mind). The same has been true of leaders who develop cautious ideas in troubled times but don’t know how to cope with opportunity (perhaps a way to understand the do-nothing administration of George Bush).

So when Speaker Newt Gingrich talks about “techno-frontiers” and Vice President Al Gore about information highways, its more than hot air. They’re trying to position the nation to move from down-years to upswing.  Whether it’s Gingrich, Gore, or someone entirely unexpected, a new leader will offer something different from the centrist politics of the 1990s. So keep your eyes open for the next Thomas Jefferson or Teddy Roosevelt to help us enter the twenty-first century.


Carl Abbott is a professor of urban studies and planning at Portland State University, Ore., and a writer for the History News Service.