What was the real cause of the Great Recession? More importantly, in a country accustomed to robust rebounds from burst bubbles, why is our economy stuck in neutral?
In his latest book, The Third Industrial Revolution, economist and author Jeremy Rifkin argues that the crash of the US housing market was not the proximate cause of the Great Recession, but was instead an aftershock of crude oil hitting a price of $147 per barrel oil in July 2008 – 60 days prior to the crash of the financial markets.
Mr. Rifkin makes a compelling case that our economy reached the end of the second industrial revolution in the 1980’s, and has been largely sustained by debt and the consumption of savings ever since. He argues that the kind of growth witnessed after the first and second industrial revolutions will be impossible to achieve without a third energy-communications revolution – one that leverages Internet-esque smart grids to transition from a centralized “elite” energy paradigm to a highly granular, lateral model. He contends that, as was the case with the first two industrial revolutions, the third revolution will be the foundation of the next great wave of economic growth.
Our energy infrastructure may not be the only thing that requires a rethink. In his book, Mr. Rifkin takes on Adam Smith, challenging classical economic theory with the contention that it does not take thermodynamics into account. The Third Industrial Revolution presents economic theory that incorporates entropy and the relationship between commerce the planet.