Doing Capitalism in the Innovation Economy : Reconfiguring the Three-Player Game Between Markets, Speculators and the State

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 innovative technology transforms the market economy. In this fully revised and updated edition, Janeway explains how state investment in national goals enables the innovation process and why financial bubbles accelerate and amplify its impact. 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. 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 Enable 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-- The Primary Purpose Of The Book That Follows Was To Explore How The Evolutionary Process Of Economic Growth Driven By Technological Innovation Has Depended Upon The Constructive, Although Often Unwitting, Collaboration Of Mission-driven State Actors And Financial Speculators. Much Of The Most Recent Iteration Of This Process I Lived As A Working Venture Capitalist, While Drawing On My Education In The Economics Of John Maynard Keynes To Grasp How State Investment Motivated By National Security Could Trigger A Productive Bubble In The Capital Markets And Radically Accelerate The New Economy In Which We Are All Learning To Live. The Book Comprises Four Parts. The First Two Offer A Chronicle Of How I Simultaneously Learned How The Game Works And How To Play It. They Serve As An On- Ramp To The Frontier Of Innovation, Where Progress Is Achieved Through Darwinian Processes Of Trial And Error, Subject To Intense Competitive Pressure Under Conditions Of Uncertainty, Even Ignorance, About The Consequences Of Action And The Returns On Investment-- Part I. Learning The Game: 1. Apprenticeship -- 2. Discovering Computers -- 3. Investing In Ignorance -- Part Ii. Playing The Game: 4. The Financial Agent -- 5. The Road To Bea -- 6. Apotheosis -- Part Iii. Understanding The Game : The Role Of Speculation: 7. The Banality Of Bubbles -- 8. Explaining Bubbles -- 9. The Necessity Of Bubbles -- Part Iv. Understanding The Game : The Role Of The State: 10. Where Is The State? -- 11. The Failure Of Market Failure -- 12. The Digital Revolution Of The State -- Conclusion: The Dark Side Of The Three-player Game -- Coda: The Power Of Ideas. William H. Janeway. Revised Edition Of The Author's Doing Capitalism In The Innovation Economy, C2012. Includes Bibliographical References (pages 372-396) And Index. "The innovation economy begins with discovery and culminates in speculation. Over some 250 years, economic growth has been driven by successive processes of trial and error: upstream exercises in research and invention and downstream experiments in exploiting the new economic space opened by innovation. Drawing on his professional experiences, William H. Janeway provides an accessible pathway for readers to appreciate the dynamics of the innovation economy. He combines personal reflections from a career spanning forty years in venture capital, with the development of an original theory of the role of asset bubbles in financing technological innovation and of the role of the state in playing an enabling role in the innovation process. Today, with the state frozen as an economic actor and access to the public equity markets only open to a minority, the innovation economy is stalled; learning the lessons from this book will contribute to its renewal"-- In this fully revised and updated edition, Janeway interweaves his professional experience with political and financial history, giving a lively explanation of how successive technological revolutions have transformed the market economy, and revealing why America may yield leadership of the innovation economy to China.