PREDICTIONS – 10 Years Later - Santa Fe Institute

8. A COSMIC HEARTBEAT
tional Product—in other words a recession. New growth will follow
only after a fresh batch of innovations.
Basic innovations—defined in Chapter Seven as something that
starts a new industry or a new kind of product from already existing
inventions—occur more readily during recessions, when fewer low-risk
investment opportunities are available. These innovations act as catalysts
provoking fundamental changes in the structure of the economy,
its technological base, and many social institutions and relationships.
Growth and substitution of old basic technologies by new ones (e.g.,
automobiles for horses, motor for steam, oil for coal, airplanes for
automobiles) take place during the upswing of the economic cycle.
We can see in Figure 8.2 that such upswings occurred in 1884–1912
and 1940–1968. The early 1990s was a period of economic recession, a
time when innovations abound, but this does not imply an imminent
economic upswing. The new activities coming into existence must grow
significantly before they have an impact on unemployment and economic
development. The energy clock says that the rock bottom of the
recession was in the mid 1990s. From then onward the rate of growth
will progressively increase, but it will only reach a maximum—the next
boom—in the early 2020s.
Ten Years Later
The American economy seemed to defy the above conclusion
that the rate of growth should increase slowly. In the
second half of twentieth century’s last decade the American
economy galloped at unprecedented rates. The stock market,
and particularly the NASDAQ, skyrocketed. But the price for
this precautious prosperity was the painful slowdown that settled
in with the new millennium. Other economies around the
world, notably Europe, grew less rapidly and declined less
dramatically. All along Europeans stayed close to the recovery
rate dictated by a natural-growth process aiming at top prosperity
only around 2020.
As for oil prices, the little black dots in Figure 8.3 show
that despite all the sweat and tears, oil prices remained around
185