The new economy, the leadership longcycle and the nineteenth K-waveJoachim K. RennstichIndiana University
ABSTRACTMost authors analysing the ‘New Economy’ study it as an isolated phenom-enon. This approach, however, misses the continued signiŽcance ofstructural economic and socio-political fundamentals, both domesticallyand within the world economy. This paper examines the current changesin the global economic environment in a historical and structural contextand identiŽes change as a pattern constantly discernible in at least the past1,000 years. The changes leading to the New Economy are neither uniquein a historical context, nor do they represent the end of the nation stateand its role in the global economy. Instead, the changes represent a commonpattern observed over an extended period of time. A convincing frame-work to study and explain the question of economic and political globalleadership in the course of history is the leadership long cycle paradigm.The paper identiŽes the Internet as the new leading sector of the nine-teenth K-wave and the US as the country most likely to be the old andnew leading economy in the world economic and political system.
KEYWORDSGlobalization; leadership long cycle; new economy; leading sectors; K-waves; Internet.
THE NEW ECONOMY AND THE LEADERSHIP LONG CYCLEProponents of the ‘New Economy’ are gaining acceptance both in popu-lar and academic circles. It is far from clear, however, whether we areindeed witnessing the development of a truly ‘New Economy’ as the out-growth of a changed global techno-economic paradigm or whether thesechanges are simply advancements within the existing ‘technological style’.One way to answer this question is to put the current transformation ina historical context. This paper argues that the changes associated withthe New Economy indeed represent the development of a new techno-economic paradigm leading to the development of genuine New
Review of International Political Economy 9:1 March 2002: 150–182123456789101112131415161718192021222324252627282930313233341135363738394041424344Folio Review of International Political EconomyISSN 0969-2290 print/ISSN 1466-4526 online © 2002 Taylor & Francis Ltdhttp://www.tandf.co.ukDOI: 10.1080/0969229011010113 5

Economy where old problems are tackled differently. This process ofchange is a common pattern observed over an extended period of timein world history. The combination of the right mix of economic leader-ship in key innovative, so-called leading sectors, military ability and will-ingness to engage, and the appropriate institutional environment haveled to the development of a dominant power or hegemonic leader withina common world economic and political system. Because of its ability todo old things (value creation) in a dramatically new fashion, and evencreate new forms of value, this leader was historically able to set a new‘complex’ (Mann, 1986), in other words, to create a ‘New Economy’encompassing not only a new techno-economic subsystem but also a newsocio-institutional one. The Žrst part of this paper looks at the interrela-tionship between economic development and technological change, andspeciŽcally the concept of the leadership long cycle. The second partplaces the New Economy in a historical context and develops indicatorsfor the measurement of the newly evolving long cycle, introducing theconcept of the informational network economy in order to identify thechanges in the global economic environment.1 The paper concludes withan outlook on the possible location of the centre of the new long cycleand provides some arguments that the US may be best positioned for aleadership position in the informational network economy.
TECHNOLOGICAL CHANGE AND LONG CYCLESWhile differences in their exact deŽnition and description are reected inthe literature,2 the very existence of long cycles as a phenomenon in worldhistory is gaining widening acceptance (Frank and Gills, 1993: 36–7),although a number of authors still deny their existence on theoretical andempirical grounds (e.g. Rosecrance, 1987).3 For an extended period nowthe capitalist market system has experienced major transformations incommunication, transportation and production technologies, occurring incyclical fashion. From a Schumpeterian view, the process of innovationis the key to understanding economic development and its cyclical behav-iour. However, as Perez (1986: 27) points out, long cycles are not strictlyan economic phenomenon, but rather the measurable manifestation of theharmonious or disharmonious behaviour of the total socio-economic andinstitutional system, both on the national and international level. Perez’sconcept of technological style, or techno-economic paradigm, furtherdeveloped by Bornschier (1996), refers to a cluster of components, includ-ing basic materials, industrial procedures with their associated patters ofmechanization, the division of labour, organizational and corporate struc-ture, supply of goods with speciŽc patterns of distribution, consumptionpatterns and models of lifestyle and leisure behaviour (Perez, 1986).The Perezian approach to technological change is similar in its breadth
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