William H. Janeway - Doing Capitalism in the Innovation Economy: Reconfiguring the Three-Player Game between Markets, Speculators and the State

Doing Capitalism in the Innovation Economy

Legendary economist Hyman Minsky identified author William H. Janeway as a theorist-practitioner of financial economics; this book is an expression of that double life. Interweaving his unique professional perspective with political and financial history, Janeway narrates the dynamics of the Innovation Economy from the standpoint of a seasoned practitioner of venture capital, operating on the frontier where financial speculation intersects with novel technology. In this fully revised and updated edition, Janeway develops his theory that asset bubbles play a central role in financing technological innovation and that state investment in national goals enables the innovation process. Now, the digital revolution, sponsored by the state and funded by speculation, has matured to attack the authority, and even the legitimacy, of governments. The populist response in the West, especially in the United States, opens the door for China to seize leadership of the Innovation Economy from America.

WILLIAM H. JANEWAY has been an active venture capital investor for more than forty years. In particular, he built and led the Warburg Pincus Technology Investment team that provided the financial backing to a series of companies that made critical contributions to building the internet economy. He received his Ph.D. in Economics from Cambridge, where he has endowed the Cambridge Endowment for Research in Finance and the Janeway Fund for Economics, and is an affiliated member of the Economics Faculty. He is a member of the Board of the Social Science Research Council, of the Institute for New Economic Thinking and of the Fields Institute for Research in the Mathematical Sciences.

Doing Capitalism in the Innovation Economy is a brilliant (and also much-needed) breath of fresh air. Bill Janeway tells about capitalism as it really is: from his joint perspective as leading-venture-capitalist/leading-economic-theorist.

Bill Janeways double hat of venture capitalist and economist brings a fresh perspective to bear on the political, economic and financial forces behind innovation. This second edition complements the first by tackling new and really important questions, such as the perception of slower productivity growth, the flood of passive investor capital in search of yield in a low-interest world, or the US disengagement of the state. From the analysis of bubbles as speculative funding through the importance of assured access to cash, Doing Capitalism in the Innovation Economy is key reading for all those interested in the future of innovation.

Bill Janeway nails it again. Yes: the innovation game has changed one more time, with different roles for the Three-Player Game that Janeway defined and so accurately portrayed in the first edition. Technological innovations primarily focused on hardware gave way to those focused on software, which, in turn, gave way to services, which is now giving way to data as the source of competitive advantage. Each of the changes requires a shift in how you play the innovation game. But this last shift will have dire consequences for those who dont fully understand just how fundamental it is. This book is a must-read.

Anyone who thinks that innovation is driven by the rational market-driven processes of standard economic theory understands neither the history nor the practical reality of innovation. Bill Janeway understands them a lot and has thought deeply about the implications. The result is a superb book which not only debunks mainstream theory but explains the crucial roles which both governments and the private sector must play to drive the innovation which society needs.

The world has never been more in need of the economic and political insights of Bill Janeway. I can think of few books that have taught me as much as this one. It will help you see the world around you more deeply how we got here, where we want to go, and how to renew our faith in our institutions and our future. It is wise, insightful, and rich with economic history, the personal stories of a brilliant investor, and an essential call to action for business leaders, investors, and policy makers.

This one-of-a-kind book bringing together insights about venture capital, macroeconomics and the future of technology is now more timely than ever. How to reconcile the dynamism of 21st-century technology with the disappointing sluggishness of economic growth and persistent stagnation of wages is one of the great intellectual challenges of our age. The explanation, Bill Janeway suggests, lies at the junction of technology and finance. There is no one better qualified than the author to help us navigate that dangerous intersection.

Neither Adam Smiths nor Henry Fords picture of the economy is relevant for us today. What thumbnail picture is relevant? We do not know, but Bill Janeway thinks harder and more successfully about this question than anybody else I have seen.

When the despair of troubled economic conditions compels us to yearn for a better time, our fantasies gravitate to a savior called innovation. To discern whether such yearning attracts us to a mirage or to a sound basis for hope requires a discriminating and experienced mind. I know of no better mind in this realm than Bill Janeway, whom Hyman Minsky called a theorist-practitioner of financial economics. He has spent 40 years at the forefront of venture capital and financial economics. He takes us beyond mechanical details and reveals the deeper processes and interactions between state, market and finance that can foster and/or inhibit technological progress. Doing Capitalism leaves the neoclassical economic framework in tatters. It is a historically grounded and sophisticated look at how our society must rise to the challenges of collective action under radical uncertainty and integrate institutions on many levels to bring about the betterment of our human condition. This fine work will deepen your understanding of what innovation entails and impart a vision that will both surprise you, and inspire you, to move beyond your prejudices, whatever your political persuasion.