A rewarding memoir about the learning, training and life experience required to achieve mastery in the venture economy.
Warburg Pincus senior advisor Janeway debuts with this account of the implications of relatively less-discussed aspects of the economic theories of John Maynard Keynes, including his interest in investment and speculation and views of the fallibility of human judgment. The author reviews several main strands in the development of contemporary economic theory and shows where their advocates have gone off the rails or worse. His frame is provided by what he calls “three sets of continuous, reciprocal, interdependent games played between the state, the market economy and financial capitalism.” Janeway asserts that modern market orthodoxies are absolutely wrong, that there is no such thing as a hedge for any investments, that bubbles have beneficial effects as well as unpleasant ones, and that “cash and control,” not debt, are key at all levels to offset the dangers of illiquidity crises. The author’s own career provides the context for a much broader discussion of the history of scientific and technological innovation in relation to the development of market-based economies. He shows that only the state can sponsor the outcome-independent commitment to basic science that makes economic innovation possible, but which also requires investment best mobilized through stock markets. Interestingly, Janeway argues that what became known in the 19th century as the “American System,” associated with Alexander Hamilton, remains the most effective political organization for the three-player game.
A well-written, occasionally humorous book most appropriate for specialists but useful for general readers as well.