Government policies tend to be capital-friendly. These conditions are favorable for the large amount of investment required to launch the new economy. As the new economy grows, it provides alternate avenues for consumer spending that did not exist in the old economy. These new avenues compete with the old, resulting in an effective attentuation of demand for the old economies goods and services even during economic expansions. Old economy businesses are forced to compete on price, resulting in downward pressure on prices.
Inflation starts to fall.
Old-economy businesses must invest to increase productivity or they will fail to generate a profit under these new conditions. The old enterprises shed workers who are absorbed by the new. As the new economy grows, its need for workers eventually outstrips those made available by the restructuring old and wages begin to rise. The new businesses now must start to improve their productivity too. Most do not succeed and either fail or are acquired by those who do succeed.