Without knowledge of the past there is no future

Calculating share indices as described above and showing indexes in historical graphs is a useful way to show which stage of the cycle is currently being experienced.

The third Industrial Revolution is clearly in the saturation and degeneration phase. This phase can be recognised by the saturation of the market and increasing competition. Only the strongest companies can withstand the competition or takeover their competitors (for example, takeovers executed by Oracle and Microsoft over the past few years). The information technology world has not seen any significant technical changes recently, despite what the American marketing machine wants us to believe.

During the pre-development phase and the takeoff phase of a transition, many new companies spring into existence. This is a diverging process. Financial institutions especially play an important role here, as these phases require large quantities of money. Graphs showing the wages paid in the financial sector therefore show the same ‘S curve’ as both previous revolutions.

Investors get euphoric when hearing about mergers and acquisitions. Actually, these are indications of the converging processes towards the end of a transition. When looked at objectively, each merger or takeover is a loss of economic activity. This becomes painfully clear when we have a look at the unemployment rates of some countries.

New industrial revolutions come about because of new ideas, inventions and discoveries, so through new knowledge and insight. Here too we have reached a point of saturation. There will be fewer companies in the takeoff or acceleration phase to replace the companies in the index shares sets that have reached the stabilisation or degeneration phase.

Will history repeat itself?

Humanity is being confronted with the same problems as those at the end of the second Industrial Revolution, such as falling stock exchanges, high and increasing unemployment, towering debts of companies and governments, and the weak financial position of banks.

History has shown that there are five pillars to a stable society:food, security, health, prosperity, and knowledge.Transitions are initiated by inventions and discoveries, new knowledge of humankind. New knowledge influences the other four components of society. At the moment, there are few new inventions or discoveries. So the chance of a new Industrial Revolution is not very high. At the end of every transition the pillar of prosperity is threatened. We have seen this effect after every Industrial Revolution.

The pillar of prosperity in society is about to fall again. History has shown that the fall of the prosperity pillar always results in a revolution. Because of the high level of unemployment after the second Industrial Revolution, some societies initiated a new transition, the creation of a war economy. This type of economy flourished especially in the period 1940 to 1945.

Now societies will have to make a choice for a new transition to be started. Without knowledge of the past there is no future.