Finance, the state and innovation

From the Enlightened Economist:

“Yesterday brought the launch of a new and revised edition of Doing Capitalism in the Innovation Economy by William Janeway. Anybody who read the first (2012) edition will recall the theme of the ‘three player game’ – market innovators, speculators and the state – informed by Keynes and Minsky as well as Janeway’s own experience combining an economics PhD with his experience shaping the world of venture capital investment.

The term refers to how the complicated interactions between government, providers of finance and capitalists drive technological innovation and economic growth. The overlapping institutions create an inherently fragile system, the book argues – and also a contingent one. Things can easily turn out differently.

The book starts with a more descriptive first half, including Janeway’s “Cash and Control” approach to investing in new technologies, and also an account of how the three players in the US shaped the computer revolution. This is an admirably clear but nuanced history emphasising the important role of the state – through defense spending in particular – but also the equally vital private sector involvement. I find this sense of the complicated and path dependent interplay far more persuasive than simplistic accounts emphasising either the government or the market.”

Continue reading here.

Posted by at 11:33 AM

Labels: Macro Demystified

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