The critical question is, are they related? To what extent have technologies spurred the social change? It is not hard to imagine that most technological revolutions have played a significant role, sometimes as a catalyst in many social revolutions. For example, while air travel has made any place in the world just a day away; the discovery of penicillin changed the course of medicine; the invention of nylon started a revolution in textiles; “the pill” empowered women; and computers and the Internet set in motion the information revolution democratizing many things, including innovation and entrepreneurship.

Innovation and Entrepreneurship

As Freeman (1994) notes, one of the continuing paradoxes of economic theory is the contrast between the consensus that technical change is the most crucial source of dynamism in capitalist economics and its relative neglect in literature. Legendary economist Marx in the 19^th century considered technology an essential aspect of production theory and pointed out that human history has always been associated with technological development. According to Marx, we must always study and discuss human history in connection with the history of industry and exchange, as the sum of productive forces achieved by people determines the social situation (Marx, 1960). Similarly, celebrated economist Schumpeter’s notion of socioeconomic evolution through technological change is the basis of his innovation theory. While Schumpeter’s Theory of Economic Development (1911) and Capitalism, Socialism, and Democracy (1943) received significant attention and accolades, another of his seminal works, Business Cycles: A Theoretical, Historical, and Statistical Analysis of the Capitalist Process, where he laid out his theory of innovation did not get its due recognition at that time of its publication, especially in the mainstream economics literature.

However, the broader innovation theory literature discusses digital technologies and social change (Freeman, 1994). While much has been published on innovation and entrepreneurship acknowledging Schumpeter’s theory, they failed to underscore innovating activity and its impact, which was central to Schumpeter’s analysis.

Creative Destruction, Waves of Innovation, and Business Cycles

Schumpeter (1939), called the “prophet of innovation” by McCraw (2009), analyzed business cycles, theorized that the destruction of businesses, fortunes, products, and careers is the price of progress toward a better material life, and identified the bedrock economic principle. Schumpeter coined an illustrative name, “creative destruction,” in 1942, which suggests that business cycles operate under long waves of innovation. He noted this is the driving force of capitalism. Creative destruction works on different levels, reaching from product cycles, over fashion and investment—lifecycles (including so-called Kitchin and Juglar cycles) to so-called business cycles. Specifically, as markets are disrupted, key clusters of industries have outsized effects on the economy (Hilbert, 2020).

Railways completely reshaped urban demographics and trade at the turn of the 19th century. Similarly, the Internet disrupted entire industries—from media to retail. As Hilbert (2020) notes, digital technology, including its omnipresent connectedness and powerful artificial intelligence, is the most recent long wave of humanity’s socioeconomic evolution. Neufeld has analyzed the six waves of innovation, from waterpower in 1775 to robots and drones in 2020.

Ogburn’s Theory of Social Change and Technology

In 1922, William Fielding Ogburn published his seminal work Social Change with Respect to Culture and Original Nature. Ogburn’s most enduring intellectual legacy is the theory of social change he outlined in his book. His theory of social change suggested that technology is the primary engine of progress, but social responses also temper it. According to Ogburn (1947), technology changes our material environment to which we, in turn, adapt. Inventions influence society first through mass production and then through mass consumption, and believed that consumption changes are more direct, varied, and widespread, slowly changing habits. Thus the social effect is more than the arithmetical sum of individual changes but more derivative and transforming social institutions. Furthermore, the adjustments we make often modify customs and social institutions. He cites many examples, including how the invention of contraceptives resulted in the small-family system, including the consequent influence on family duties, relations, attitudes, and traditions. He also acknowledges the role of human will in modifying or denying these influences. Ogburn is also well known for his idea of “culture lag” in society’s adjustments to technological and other changes.

Transforming Information: The Third Metaparadigm

Derived from Schumpeter’s waves of innovation, Hilbert (2020) distinguishes three different long-term meta paradigms, each with different long waves. The first focused on transforming material, including stone, bronze, and iron. The second, often called the industrial revolution, was dedicated to transforming energy, including water, steam, electricity, and combustion power. Finally, the most recent meta-paradigm aims at transforming information. Variously called the information revolution, information age, information society, and others, this new digital paradigm has entered the final stage of diffusion; perhaps even the Laggards are not left behind (to use Roger’s model of diffusion).

Hilbert (2017) estimates the beginning of the “digital age” to be in 2002 when the world was first able to store more digital than analog information in its technological tools. In the late 1980s, less than 1% was in digital format, whereas in 2012, 99% of the world’s stored information was digital. While the power of AI in the digital age is dazzling, the pitfalls are worrisome, too (Urs, 2022).

Democratizing Innovation and Entrepreneurship

One of the remarkable features of the digital age is its reach, in addition to the depth and range of adoption and adaptation. Digital technologies have unleashed the creative adoption and diverse applications of technologies while flattening the world, creating fortunes for the bottom of the pyramid (à la Prahalad), and starting a reverse innovation process (à la Govindarajan, 2012). Opportunities for entrepreneurship and (fortunes) are not limited to the privileged few. As the access to information and technologies became almost ubiquitous, innovation no longer remained the monopoly of the big or rich nations or companies. The diffusion of innovations was not only in terms of people/companies/nations as consumers but also as producers. Another influencing factor has been the open-source software, open data,  and open access movements. Open source and open innovations movements have gained momentum, significantly increasing access to codes, software, data, and platforms to spur innovations in information technologies and create a long tail of innovation (à la Anderson). As Bruche  (2009) notes, new geographies of innovations are rising. Along with it, new demographics and classes of innovators too.

The Changing Landscape of the Information Industry: An Internet Entrepreneur’s Take

Listen to this episode of InfoFire, where Ajit Balakrishnan, founder, chairperson, and CEO of Rediff. Com shares his optimism about the power of technology to create a level playing field for anyone with the willingness, enterprise, and appetite for leapfrogging.

Ajit is a consummate entrepreneur who cofounded Rediffision—an advertising firm, in 1973 when he was barely 22 years old. The author of the book Wave Rider, Ajit Balakrishnan, is a wave rider who saw and seized opportunities during every wave of the digital revolution—from PCs in the 1980s to the Internet in 1995. He founded Rediff.com in 1995, was listed on NASDAQ in 2001, and ranked among India’s most successful Internet companies. Ajit launched Rediff when the Internet in India was barely five months old and had about 18,000 users.

Ajit began his entrepreneurial journey in the early 1970s as he set foot in Mumbai after graduating from IIM Calcutta. Here, he recounts how he was witness to a social revolution of the textile mill workers’ strike in the early 1980s in Mumbai set in motion by the chemical revolution started by the invention of nylon. His fascination for the possibilities of media spurred him to cofound Rediffusion, and similarly, the immense possibilities that the Internet as a medium offered turned him into a pioneering Internet entrepreneur. As he shares in this interview, he was so excited to see Tim Berners Lee’s first website, and the possibilities of the Web dazzled before him.

In this fireside chat, Ajit Shares his optimism about the immense possibilities of new technologies such as Blockchain and Metaverse, along with a word of caution. Just as steam engines and sailing ships opened up immense opportunities for international trade, they also brought about colonization. In today’s world, there is a possible danger of big tech companies colonizing the world in the digital age. He says we are already a slave to the five big tech companies; we send our emails and get news from them. He says it is worth cautioning that all technological breakthroughs come with pluses and minuses, and you must carefully steer public policy to do something about it.

From Nylon to Blockchain, mobile phones to the metaverse, technologies create opportunities and dismantle centralization. He believes that the banking industry is one of the sectors impacted by Internet technologies—most transactions are done online, and hence the industry inevitably has to shrink drastically. Sharing his experience of how small-time shop owners have adopted/adapted to the digital revolution and eCommerce and digital payment systems, he says he is an optimist who believes that the digital age has set in motion the democratization of talent.

Ajit shares his excitement about the next level where internet technology is going, which is the blockchain phenomenon. “Conceptually, you can say that suddenly it means moving away from the centralized structure to a completely decentralized one. A blockchain is a decentralized ledger, meaning you do not need a central authority to approve or disapprove things. That is a fascinating time, and I am spending a couple of hours today writing code in blockchain to understand its full dimensions,” said Ajit. He expects blockchain technologies to present lots of positives but also negatives. For example, it may destroy the financial industry as we know it. The giant payment companies and the banks are severely threatened.

While most industrial revolutions brought about increased centralization, we will see more decentralized working systems in the new digital era thanks to COVID and the Work From Home culture. Our society and civilization will be transformed in many ways due to its impact on the automobile industry, and the real estate landscape will change once the Work From Home, which has begun, takes off in a big way.

Ajit Balakrishnan is gung ho about the metaverse technology too. He believes that the metaverse is a technology slowly boiling in the background with thousands of companies working on the same. While good examples of this new technology are yet to be found, the fact that different virtual versions of human beings and material things will be there seems like a whole new world. Thousands of companies worldwide are trying to be early in the game and see that is becoming a way of life. Nevertheless, it is unimaginable how we will conduct our life and entertainment through different versions of ourselves. “Oh, God, I think it is, you know, if that is not another wave, it is a super big wave that will happen,” he exclaims.

According to Ajit, while the computer era created opportunities for middle-class Indians, the Internet era has been an enabler and equalizer. He believes the mobile Internet’s deep penetration has benefited the bottom of the pyramid more. It has made access to information, news, education, and entertainment almost free, thus creating opportunities more than ever.

As Von Hippel (2005) observes, users’ ability to innovate is improving radically and rapidly due to the steadily improving quality of computer software and hardware, improved access to easy-to-use tools and components for innovation, and a steadily richer innovation commons.

References

Bruche, G. (2009). A New geography of innovation—China and India rising. Transnational Corporations Review, 1(4), 24–27.

Freeman, C. (1994). The economics of technical change. Cambridge journal of economics, 18(5), 463-514.

Hilbert, M. (2017). Information quantity. Encyclopedia of big data, 1–4.

Hilbert, M. (2022). Digital technology and social change: the digital transformation of society from a historical perspective. Dialogues in clinical neuroscience.

McCraw, T. K. (2010). Prophet of Innovation: Joseph Schumpeter and creative destruction. Harvard university press.

Marx, K. (1960). Marx Engels Collected Works. New York

Ogburn, W. F. (1947). How Technology Changes Society. The Annals of the American Academy of Political and Social Science, 249, 81–88. http://www.jstor.org/stable/1025427

Schumpeter J. A. (1939). Business cycles: a theoretical historical and statistical analysis of the capitalist process. McGraw-Hill Book Company.

Urs, S. (2022, May 4). The power and the pitfalls of large language models: A fireside chat with Ricardo Baeza-Yates. Information Matters, Vol. 2, Issue 5.

Von Hippel, E. (2005). Democratizing innovation. the MIT Press.