Letter from Carlota Perez: 'The world is transformed by transforming it. And to transform anything one has to know how.'

I will be moving out of Tallinn in a few days' time. I will definitely miss the sights, sounds, smell, taste, and feel of Tallinn (I don't even wear my iPod these days, trying to be present most of the time and cherishing the things that I'll miss - those that have had become a part of my routine in the last 10 months). Tallinn has taught me a lot - academically, professionally, and personally. Thank you, thank you, thank you! The Tallinn experience has indeed been a good game, and will have tremendous impact on the pursuit of my personal legend.

As I pack up my things and tidy up my files for my return to the Philippines and later on settling in Denmark for another upcoming adventure, I came across this letter to me by Carlota Perez, author of the longtime Edward Elgar bestseller Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages (2002). To act as her teaching assistant on September 2006 was one of the best learning encounters I had in Tallinn. I have gotten to know closely a serious researcher, a dedicated teacher, and a truly lovely woman. I wish to share with you this thoughtful letter of Tita Carlota, instilling in me that idealism should be firmly grounded on wisdom and knowledge.

7 October 2006

Dear Bonn,

I read your letter now. It holds very similar views to your review and it is also very well written and argued. But of course you now know that I do not believe in those total transformations of the system.

We do not have any alternative theory to capitalism. Certainly Marx ended his critique of the system by saying that the workers should take over. That is not a theory of how to do it. Worse still, the foundations of that tenet are the socialization of the forces of production which he thought was occurring at the end of the second great surge. Many things have happened since then. Among other things his proposal was tried out and failed.

The Soviet experience showed how the workers (or the members of the party that says to represent them) become a privileged caste that uses power for its own aims and to control society but is not capable of setting up a social system of happiness for all. In my view, the best historical example of something really decent was the Swedish social democratic experience, but that (as much as the Soviet one and the Keynesian welfare state) was based on the characteristics of the mass production paradigm, which is now exhausted.

Thus we do not have a theory (or historical experiences) of how growth and social development can be achieved in a manner that is different from capitalism. We do have the experience of modifying capitalism as in the Keynesian welfare state to improve the lot of the great majority of society. I certainly believe in understanding the world in order to transform it for the better. My present understanding leads me to think that we can improve the present world with the present paradigm in ways that will make the lot of the majority of the people on the planet better.

It is not easy and it requires knowledge, knowledge and more knowledge; perseverance, perseverance and more perseverance; creativity, creativity and more creativity. It will not happen with anger, resentment, desperation, impatience, radical criticism or violence and destruction.

One cannot transform the world by "revealing" how awful it is and by wishing it were radically different. The world is transformed by transforming it. And to transform anything one has to know how.

I understand your impatience and I value the very serious efforts you are putting into studying and your acute sensitivity to injustice and inequality. I know, however, that personal experience is accumulated tacit knowledge that I cannot transmit to you. There is no other way than for you to learn for yourself through trial and error.

You can count on me in your journey.

Best wishes,
Carlota

One could just imagine how ecstatic I am receiving this reply from Carlota herself two years after I wrote it in the first instance only as a course requirement. I wrote my letter to her on September 2004 - the first time I read her book as a requirement in the course by J. Gabriel Palma when I was doing my International Masters in Regional Integration (IMRI) degree at the Asia-Europe Institute. Gabriel then required us to write a one-page 'think piece', a reflection of the assigned reading for each day. For that day, I chose to read her book and my 'think piece' style was in the form of a letter to the author. I read the letter in class. I read it again in Erik Reinert's course, as well as in Banji Oyelaran-Oyeyinka's and Carlo Pietrobelli's, professors who also required us to read her book. Here was the think piece I wrote:

20 September 2004

Dear Carlota Perez:

In your book Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages (2002) you have reinvented Schumpeter's concern on financial capital that greatly influences economic growth and technological transformation by interpreting how the changing relationship between technological advances and financial capital shapes the pattern of economic cycles. Avoiding the technological determinist trap, you have argued on the historical specificity of technological revolutions, which represents what you call 'techno-economic paradigms', and showing the interaction among technology, politics, society and culture leading to certain economic pattern.

Providing a historical and empirical account of the link between technology and finance, you have interpreted in detail the major historical breakthrough depicted in what you call 'techno-economic paradigms' that initiated the revolution: the industrial revolution (1771); the age of steam and railways (1829); the age of steel, electricity and heavy engineering (1875); the age of oil, the automobile and mass production (1908); and the age of information and telecommunications (1971). In this long-wave economic cycle phenomenon, you have focused on the crucial role played by social and institutional factors in first resisting the technological revolution, and then facilitating its unfolding potential.

An interesting point you have also made in your book is your distinction between production capital and financial capital not along the lines of the quantity of assets but on the motives and criteria of the agents with the purpose of creating wealth in a capitalist system. In the epilogue, you have recommended for the leadership of production capital (i.e., agents who generate new wealth by producing goods and services and whose objective is to accumulate greater and greater profit-making capacity) over financial capital (i.e., agents who already possess wealth and whose objective is to make money grow).

Far from being revolutionary (i.e., changing the social structure from the unjust domination of capital to a more humane one), you have concluded the need to (re)create institutions that are coherent for continued capital accumulation. While you may have aptly utilized historical-structural analysis in interpreting the dynamics of economics, you seem to fail in putting the social back in to your overall analysis. There is little doubt that the dynamics between technological revolution and financial capital throughout history, and which lead us to the current information society, have made major impacts on the relations between human beings and their environments across different social groups. However, it is in ways that largely enhance, and even recompose, existing relationships in a capitalist system. I am thus interested in asking 'how is the political economy of social relations shifting under the impact of market-led technological revolution?' What are the consequences of technological revolution, and its corresponding economic pattern, in the realm of corporate control and popular use?

I would like to think that the dynamics between technological revolution and financial capital entail both an institutional and ideological intervention toward the strengthening of market-driven social relations. Institutionally, market forces are managed through privatization (i.e., the sale of public assets to private investors), liberalization (i.e., opening up of restricted markets to competition), the reorientation of regulation (i.e., the securing of business interest), and corporatization (i.e., public sector organizations adopting corporate form of organization). In your book, you have questioned socio-political institutions without even questioning the political economy of capitalism in which the information revolution has brought rising inequalities of condition. The widening of social divisions is resonated in ownership of and access to technology and finance. The great unconsummated project of our time is not just to interpret reality but to change it.

Thank you,

BONN BRYAN T. JUEGO
IMRI Student (Philippines)

Carlota gave me a present - an original copy of her book which she personally used in her course at Tallinn University of Technology with the following dedication: 'To Bonn Juego - With good wishes for a brilliant future (30 Sept. 2006)'. Thanks for the inspiration, Tita. Thank you for being part of my nurturing. I'd definitely love your presence in my journey - your valuable accumulated tacit knowledge shall provide a firm grounding on my youthful idealism.