Smihula waves

Smihula waves (or Smihula cycles, Smihula waves of technological revolutions, economic waves of technological revolutions) are long-term waves of technological progress which are reflected also in long-term economic waves. They are crucial notion of Daniel Smihula´s theory of technological progress.

The Smihula´s theory of waves of technological revolutions is based on the idea that the main technological innovations are introduced in society and the economy not continually but in specific waves, and the time spans of these waves is shortening due to technological progress.

The time period with the highest concentration of technological innovations is labeled as a “technological revolution” A period of technological revolution (an innovation phase) is associated with economic revival. When new but also already-proven and reliable technologies are available, the interest in new technological development temporary declines and investments are diverted from research to their maximal practical utilization. This period we can designate as an application phase. It is also associated with economic growth and perhaps even an economic boom. However, at a certain moment profitability (profit/price ratio) from new innovations and new sectors declines to the level acquired from older traditional sectors. Markets are saturated by technological products - (market saturation - everybody has a mobile phone, every small town has a railway station) and new capital investment in this originally new sector will not bring any above-average profit (e.g. the first railways connected the biggest cities with many potential passengers, later ones had ever smaller and smaller customer potential, and the level of profit from each new railway was therefore lower than from the previous one). At this moment economic stagnation and crisis begin – but a will to risk and to try something new emerges. The stagnation and crisis are therefore overcome by a new technological revolution with new innovations which will revitalize the economy. And this new technological revolution is the beginning of a new wave.

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