WILLIAM H. JANEWAY
With the help of markets and the state, technological innovations such as electrification and the steam engine have periodically transformed the economic system from which they emerged. But never before has a technological revolution defined the entirety of economic, political, and social life – until now. History shows that the interactions between a mission-driven state, financial speculators, and the market economy – what I call the Three-Player Game – can marshal the funding needed to drive technological innovation beyond the frontier of visible economic value and commercial exploitation. Over time, the fruits of such innovation have transformed the market economy itself.
Both World War II and the Cold War offered what even the Great Depression could not: a rationale for state intervention to direct the allocation of resources in the private sector. And within living memory, the state has played a decisive and legitimate role in guiding the development of information and communications technology (ICT).1
In the 18 years since the collapse of the dot-com bubble, however, the relationship between the technology sector and the state has been reversed. ICT’s growth to maturity depended on state-supported research and procurement. But now the sector is leading a full-fledged transformation of economic, social, and political life, comparable in scale and scope to the advent of the railroads and electrification.
William H. Janeway, a managing director and senior adviser at the private-equity firm Warburg Pincus, is an affiliated lecturer in economics at Cambridge University.
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