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Zachary Carter’s feature column in Vanity Fair was billed to me as a bank crisis-led obituary for the technology sector, but that’s not quite the case.

Here’s what he wrote: “It’s hard to imagine the tech landscape surviving long in its present state. All of these layoffs and bank failures indicate that the VC-oriented tech world was largely dependent on ultralow interest rates… They’ve already told us they can’t save themselves.”

This is a less bold claim about the tech sector - and one that I can agree with. The essay focuses on venture capitalists but we’re also seeing a partial implosion in the form of mass layoffs for the companies –, Alphabet, Meta – that combined to dominate the S&P 500 market capitalization by late 2021.

The discussion brings to mind the work of economics professor Carlota Perez, who has spent a lifetime analyzing the history of technological revolutions – the 18th century industrial revolution, through the railway boom, electricity and the rise of the personal vehicle and crude oil. We may be close to what professor Perez calls ‘the turning point’.

This process involves the end of the tech-based financial bubble and the beginning of the ‘deployment period’, as new technology diffuses through the global economy. The best historical precedent is the railway boom where, after massive over-investment led to a painful bubble deflation, the subsequent construction of railways led to a U.K. Victorian economic boom in the 1850s and 1860s.

Ms. Perez believes that the current digital revolution is half done, with the good times potentially ahead. Her template forecasts a shift from creative destruction and the evaporation of many old economy jobs towards what she calls a golden age of ‘creative construction’, where the reimagining of institutions creates a ‘win-win’ economic backdrop.

Professor Perez is vague about specific technologies she expects, but investors should watch for the technology sector to transition from a speculative casino (rising interest rates are helping kill this, as Mr. Carter noted) to companies providing broader benefits like cheap internet access in the emerging world or renewable power.

For those looking for more details on Ms. Perez’s optimistic analysis, a late 2022 lecture is posted on Youtube here.

-- Scott Barlow, Globe and Mail market strategist

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Compiled by Globe Investor Staff