Cambridge University Press 978-1-108-47127-5 — Doing Capitalism in the Innovation Economy 2Nd Edition Index More Information

Cambridge University Press 978-1-108-47127-5 — Doing Capitalism in the Innovation Economy 2nd Edition Index More Information

INDEX

3D-prototyping, 295, 296 Age of Jackson, The (Schlesinger), 248 agency problem, 236 9/11 attacks, 326 features of, 115 index funds and, 116 Accenture (formerly Andersen rise of equity-based compensation, Consulting), 112 115–117 accounting agent-based models, 40, 356 generally accepted accounting agent-based simulation models, principles (GAAP), 67 39–42, 356 marking illiquid assets to “fair Aghion, Philippe, 191, 305–306 value”, 94 agricultural research, 42 New Deal and, 283 Airbnb, xxvi, xxix, 295, post-bubble enhanced requirements, 91 296, 301 Acemoglu, Daron, 346, 348 network externalities, 297 Adams, John Quincy, 245, 249 Akerlof, George, 351–352 Adaptive Markets (Lo), 366 Albertini, Nancy, 128 Adaptive Markets Hypothesis, 366–368 Alex. Brown, 52, 122 Adler, Fred, 124 Alibaba, 92, 344 author and, 56, 72–73 Aliber, Robert, 177, 178–179 Bethesda Research Laboratories and, Allen, Franklin, 178 59–61 Alphabet, xxviii, 63, 136, 314, 361 career of, 51–52 alternative-energy ventures, 89 Daisy Systems and, 52 Amazon, xxviii, 63, 92, 147, 151, 213, on cash ﬂow, 52, 67 223, 229, 296, 314, 361 on ﬁxed costs, 67 Amazon Web Services, 312 Admati, Anat, 234 American Bell Company, 225 ADR (Applied Data Research), 118–119 American Economic Review, 198 Advanced Research Projects Agency. See American Finance Association, 197 ARPA American Marconi, 228 Affordable Care Act, xxiii, 327 American Monetary Policy, 1929–1941 launch of the online portal, xxv (Chandler), 286

398 / Index

American Recovery and Reinvestment Act assets of 2009, 224 securitization of, 22–23 American System, 245, 249–250, 251 associationalism, 256 American system of manufactures, 252 AT&T, 21 Ameritech, 119 competition from start-ups, 215 Amgen, 97 Department of Defense research Anatomy of Exchange Alley (Defoe), 188 funding, 260 Andersen Consulting, 112 failure to capitalize on new Anderson, Mark, 340 technologies, 341 Angeletos, George-Marios, 207–208 government regulations and Apotheker, Léo, 110 franchises, 313 Apple, 63, 65 inability to compete with IBM, 133–134 IPO, 51 Kingsbury Commitment and, 132 Apple iPhone, 294 licensing of products, 45 Applied Data Research (ADR), 118–119 loss of monopoly, 132 Apply, xxviii marketing ineptitude, 133–134 arbitrage MCI and, 117 BEA and, 140 monopoly of, 119, 142, 221, 301–302 Braudel on, 78–79 patents, 228 computer technology and, 140, research laboratory, 255 187, 195 strong central office, 254 high-frequency trading, 195 Tuxedo and, 133 IMI and, 112 universal service provider status, 301 limits of, 178, 192–193 valuation, 29 long-distance trade, 78–79 See also Bell Laboratories; Unix Systems Shleifer–Vishny model, 192–193 Laboratory Tobin’s q and, 205–206 Atkinson, Anthony, 308 venture capitalism and, 79–80 Atomic Energy Commission, 43 Arkwright’s Patents, 247 Auerbach, A.J., 359 Arora, Ashish, 338 Austen, Howard, 47 ARPA-E (Advanced Research Projects austerity, xxiii, xxiv, 279–280, 289–293 Agency-Energy), xxv Autodesk, 137 ARPAnet, 214, 259 automation Arrow, Kenneth, 61, 84–85, 98, 183, loss of jobs to, xxiv 261–262 automobile industry Arrow–Debreu model, 183, 352 early financing frauds, 226 Arrow–Debreu securities, 61 early speculation on, 168–169 Art of Speculation, The (Carret), 173–174 motor stock boom, 226 artificial intelligence (AI), 46–48 Autor, David, 315, 329–330, 357, 369 first hype cycle, 167 aviation industry in the cloud, xxviii early funding, 227–228 research, 46–51 Axel, Richard, 61 See also machine learning Asia Baby Bells, 214 levels of fiscal stimulus, 290–291 See also Regional Bell Operating Asian debt crisis, 181 Companies Asian Flu (debt crisis), 23 Badger, A.J., 287 Asian Tiger economies, 340 BAE Systems Asset Management, 103 factors in the success of, 142–143

399 / Index

Bagehot, Walter, 162 Basel III regulatory regime, 234 Baidu, 92, 344 Battle of Throgmorton Street, 168 Balsillie, Jim, 354 Baumol Effect, 308 Bank of England BEA Systems, 152 Crisis of 1825, 162 background to its creation, 127–130 founding of, 158, 159 beneficial regulatory changes, 131–132 model for first American banks, exploitation of new technologies, 341 245–246 initial public offering (IPO), 136–137 quantitative easing, 290 Innovation Economy and, 139–143 roles of, 270 Red Book and Blue Book, 130 suspension of its charter, 164 research project, 130–131 Bank of Japan, 290 return on investment, 141–142 Bank of the United States, 246, 250 stock price movements, 155 See also Second Bank of the United Tuxedo and, 133–137 States UniKix and, 132–133 banks and banking Warburg Pincus arbitrage banking crises of 1931–1933, opportunities, 140 178, 233 WebLogic and, 137–139 central banks, xx, xxiii, 9, 34, 36, Bear Stearns, 18, 216 163, 181 Becker, Gary, 369 commercial, 17–18 Becton, Dickinson, 56 computer technology and, 22, behavioral economics, 368 71–72 contribution of Keynes, 352 credit-fuelled speculation and, 2 behavioral finance degree of leverage in the banking bubbles and, 196–198 system, 232–233 Bell Canada, 112 econometric models, 36–39 Bell Laboratories, 142, 301 Germany, 342 UNIX and, 45, 119 Glass-Steagall Act and, 70–71 Unix Systems Laboratory, 133 Greenspan Put, 181 See also AT&T Japan, 342 Bell Telephone Laboratories, 256 joint stock investment banks, 164 Benchmark Capital Partners, 95 lender of last resort, 162 Benchmark Partners, xxix leverage of global systemically Benzel, Richard Franklin, 250 important banks (G-SIBs), 234–235 Berkshire Hathaway, 193 on old Wall Street, 18–19 Berle, Adolf, 115, 116 opening up to investment banking, Bernanke, Ben, 289 70–71 Bernard, Lewis, 70 quantitative easing, xxiii Bethesda Research Laboratories (BRL), re-regulation after crashes, 234–237 56–61 Banque Royale, 159 Bezos, Jeff, 63 Bard College, 180 bicycle bubble, 168 Barker, Jacob, 221 Biddle’s Bank of the United States, 249 Barnaby, Rob, 66 Big Bang of 1986, 71 Barrero, J.M., 355 Big Data, 148 Barrett, Jim, 60 economic value of, 304 Bartel, Larry, 319 big government Bartz, Carol, 137 Global Financial Crisis and, 326–327 Baruch, Bernard, 126 Big Pharma, 58

400 / Index

big-state capitalism, xxiii British Independent Commission on deconstruction of, 10 Banking, 234 financial crises and, 289 British Motor Syndicate (BMS), 168 from small-state capitalism to, 9–10 British Office of National Statistics, 307 Great Depression and, 180 British Union of Fascists, 279 Hyman Minsky and, 180–181, 289 brokers. See investment firms post-World War II, 228 Brooks, Steve, 124 role in the super-bubble, 180–182 Brown, Charlie, 134 US path to, 258, 321 Brown, James R., 208–209 biotechnology, xxx Brown, John Seely (JSB), 47, 48–50, 118 Bethesda Research Laboratories (BRL), Brown, Moses, 247 56–61 Brunnermeier, Markus, 364 venture capital funding, 96–101 Brush Boom, 165–167, 226 Bismarck, Otto von, 347 Brush Electric Light Company, 165 Bitcoin, 92–94 Brynjolfsson, Erik, 305, 311 Black, Fischer, 183 Bubble Act of 1720, 160 Blackberry, 354 Bubble of 1825, 161–163 Blanchard, Olivier, 191–192, 197 bubbles and crashes blockchain, 92–94 attempts to model equity bubbles, Bloom, Nick, 262, 315–316, 336–337, 188–191 355, 357 banality of bubbles, 155–176 Blunt, John, 158–160 behavioral finance, 196–198 Blyth, Mark, 244, 335 big-state capitalism and, 180–182 Boer War, 168 decennial pattern up to 1914, 163–169 Bolt, Beranek and Newman, 47 destructive bubbles, 232–234 bond markets early bubbles in France and England, computerization and, 187 157–163 junk bonds, 175, 216, 233 ever present spirit of speculation, liquidity and, 233 173–174 post-war bear market, 20 explaining bubbles, 177–204 volatility in, 201 fat tails in distribution of returns war bonds, 226 and, 185 Brainard, William, 205 financing new networks, 211–214 Braudel, Fernand, 4, 78–80, 140 grand piano smash, 188 view of financial capitalism, 155 institutionalization of the stock market, Bresnehan, Timothy, 213 194–195 Bretton Woods system, 38 IT revolution and, 186–188 Brexit, 335 manias and the credit system, 177–180 immigration issue, 331 market reality challenges market theory, influences on referendum 188–191 voting, 330 modern finance theory and, 182–186 populism and, xxiii, 293 neoclassical model of bubbles, 192 potential financial consequences, 31 no-one knows enough, 199–204 uncertainty associated with, 355 overtrading and bubbles, 197 weakness of the government responsible Ponzi aspect of bubbles, 197 for, xxxi productive bubbles, 232–234 Bringing the State Back In (Rueschemeyer rational bubbles, 191–194, 197 and Evans), 242 re-regulation of the financial industry, Britain. See Great Britain 234–237

401 / Index

speculation and, 2–3 Carlin, Wendy, 369 speculation and innovation, 229–232 Carlyle, 126 trusts bubble, 169–173 Carnegie, Andrew, 253 uncertainty and, 199–204 Carnegie Corporation, 257 waves of innovation, 218–229 Carnegie Mellon University, 136 why bubbles matter, 205–207 Carret, Philip, 173–174 See also specific bubbles and crashes cartels, 169, 324 “Bubbles, Rational Expectations and Cartwright, Nancy, 370 Financial Markets” (Blanchard and Carvalho, Vasco, 362–363 Watson), 191 Carville, James, 156, 291 Buffett, Warren, 193 Cash and Control, 355 Bull (French company), 132–133 at national level, 290 BUNCH companies, 44 Chinese government situation, 344 Burroughs, 44, 118 hedge against uncertainty, 23, 62–64 Bush, George H.W., administration, 326 importance of, 6–7 Bush, George W., administration, trust bubble and, 172–173 116, 326 unilateral pursuit of, 266 Bush, Vannevar, 42–43, 257–258 cash flow Business Cycles (Schumpeter), 256–257 Fred Adler on, 52, 67 Business Week, 282 net present value and future cash Byers, Brook, 100 flow, 300 Catchings, Waddill, 281 Caballero, Ricardo, 365–366 Cavendish, William, 254 CACI, 123 Cavendish Laboratory, 254 California Centre for Economic Policy Research, 293 environmental regulation, 339 CEO compensation, 360 Cambridge University equity-based compensation, 115–117 author at, xxxiii, 13, 14, 16 Chancellor, Edward, 189, 206 Cavendish Laboratory, 254 Chandler, A.D., 172, 220–222 war of the two Cambridges, 15–16 Chandler, Alfred, 253 “Can Lloyd George Do It?” (Keynes), Chandler, Lester, 178, 286 274, 278 Chase Econometrics, 36 Canada, 293 Chemical Fund, 26 environmental regulation, 339 Chernow, Ron, 18 Canadian Post Office, 113 Chetty, Raj, 336, 357, 369 Canal du Midi, 249 Chevrolet, 226 Canal Mania, 160, 218 Chicago Board of Trade, 243, 244 Capital (Marx), 80–81 Chicago School of economics, 243–244, capital asset pricing model (CAPM), 183 353, 369–370 Capital in the Twenty-First Century China (Picketty), 360 advance to global leadership, xxxi capital markets Cash and Control, 344 unintended consequences of deregulation, clean energy investment, 345 22–23 Communist Party control, 346 capitalism evolution of the Three-Player Game, Braudel on, 78–80 343, 348–349 Marx on, 80–81 fiscal stimulus, 290–291 Schumpeter on, 81–82 foreign exchange reserves in, 7, 343 CAPM (Capital Asset Pricing Model), 183 free trade and, xxxi

402 / Index

China (cont.) cliometrics, 223–225 government spending on R&D, 345 cloud computing, xxvi, xxviii, 146, 147, Great Firewall, 346 306, 312 initial public offerings (IPOs), 343–344 Coase, Ronald, 325–326, 369 intellectual property appropriation, Cobbett, William, 347 136–137 COBOL programming language, 259 investment in digital technologies, 346 Cochrane, John One Belt/One Road initiative, 346 Treasury dogma and, 291 potential leader of the Innovation Coffman, D’Maris, 159 Economy, 340–349 Coimbra, Nuno, 364–365 quantum internet research, 346 Colbert, Jean-Baptiste, 245, 249 residential property boom, 175 Cold War, 20, 43, 261 response to climate change, 327 Coleman, Bill, 126, 128–130, 131, 135, response to the Global Financial Crisis, 136, 137 342–343 COMDEX trade show, 128 risks to the economy, 342–343 Compagnie des Indes, 159 ruling on initial coin offerings competition (ICOs), 94 destructive, 2 state-owned enterprises (SOEs), imperfect, 353 342–343 non-economic factors, 21 war on corruption, 344–345 perfect, 80 Chuang, Alfred, 129, 130, 135, 136 Competitive Local Exchange Carriers WebLogic and, 137, 138 (CLECs), 214 Church of England, 346 Compton, Karl, 257 Churchill, Winston, 271, 276 computer-aided design, 45 Cicerone, Ralph, 327 Computer Associates, 111, 119 CICS (Customer Information Control computer industry System), 132, 136 transformation in the 1980s, 44–46 Citibank, 70 vertically integrated centralized Citizens United, 319 companies, 45 City of London, The (Kynaston), 161 computer technology Civil Aeronautics Board, 221 agent-based simulation models, 39–42 Civil War (US), 164, 221, 251 author’s discovery of, 36 Civilization and Capitalism 15th–18th client–server computing, 45–46 Century (Braudel), 78–80 development from 8-bit to 16-bit Clay, Henry, 245, 249, 339 systems, 68 clean energy innovation, 89 distributed computing systems, CLECs (Competitive Local Exchange 119–120 Carriers), 214 government investment in early client–server computing, 45–46, 119–120 research, 42–44 climate change IBM dominance in the 1980s, 44–45 development of green technologies, inﬂuence on trading, 71–72 xxxii–xxxiii opportunities in technical lack of US government policy on, computing, 108 327–328, 338–339 optical character recognition lack of US involvement, 320 technology, 50 Clinton, Bill, administration, 156, relational databases, 119 292, 326 role in Wall Street’s transformation, 22 Clinton, DeWitt, 213, 218 speech recognition, 50–51

403 / Index

System Dynamics National Model, Daimler, 168 39–42 Daisy Systems, 52 ComSat, 217 DARPA. See Defense Advanced Research Conant, James, 257 Projects Agency (DARPA) Connors, Tom, 116 Darwin, Charles, 254 character of, 116 data Control Data, 44, 123 as source of value, xxviii Controlled Materials Plan, 25 data analysis Cooper, Richard, 324 methodologies used in economics, 371 CORE project, 369 Data General, 52 corruption, 250, 251, 288 data mining, 310, 313 Britain during the First Industrial David, Paul, 308–309 Revolution, 346–347 Davidson, Paul, 16 Chinese government crackdown on, Davis, Cary, 130 344–345 Davol, William C., 247 Corsetti, Giancarlo, 358 de Castro, Ed, 52 Costa Rica, 165 De Loecker, J., 335–336 Council of Economic Advisors, 286 de Ridder, Martaan, 336 Covad, 214–217 Deaton, Angus, 370 Coyle, Diane, 306, 366 Debreu, Gerard, 62, 183 Crash of 1857, 164, 221, 224 debt Crash of 1929, 16, 17, 155, 174, 178, emerging market debt, 175 227, 233 growth in private sector debt Crash of 1987, 23, 181 1981–2000, 175 crashes. See bubbles and crashes See also deficits, fiscal and specific crashes DEC. See Digital Equipment Cravath, Swaine and Moore, 55 Corporation (DEC) Cray Research, 32 decision making creative destruction, 3 under uncertainty, 355 benefits for the Innovation Economy, decoupling of demand and supply, 326 350–352 decoupling of investment from return, 1, Britain’s path to democratic capital- 142, 213, 233, 261, 277 ism, 347 decoupling of price and value, 171, 201 credit Defense Advanced Research Projects manias and, 177–180 Agency (DARPA), 127, 259 securitization of, 233–234 deficits, fiscal, 18, 180–181, 281, 283, credit bubble, xxxiii 287, 291 credit bubble of 2004–2007, 172, 233 Defoe, Daniel, 157, 188 credit default swaps, 185–186, 234 Deliveroo, 298 Crédit Mobilier, 164, 251 DeLong, Brad, 192, 222–223, 267, Crisis of 1847, 163 303, 358–359 Crisis of 2008. See Global Financial Crisis; demand super-bubble elasticity of, 324, 362–363 crowdfunding, 92 democracy crypto-currencies, 92–94 globalization and the nation state, 328 culture Deng Xiaoping, 267 frictions caused by digitalization, 297 Depression. See Great Depression Customer Information Contol System. See deregulation CICS unintended consequences of, 22–23

404 / Index

derivatives digital technologies credit ratings, 172 investment in China, 346 exemption from regulatory Dillon, Clarence, 24 oversight, 182 Dillon, Read, 18, 24, 69 modern ﬁnance theory and, Dimon, Jamie, 7, 63 183–184 disagreement models, 197 pricing models, 183, 184 distributed computing systems, 119–120 securitization of credit, 233–234 distributed ledger networks, 92–94 See also credit default swaps distribution of resources Devil Take the Hindmost CEO compensation, 360 (Chancellor), 189 inequality of, 359–361 Dexter Corporation, 61 populism and, 360 digital disrupters, 300 top of the distribution, 360 Digital Equipment Corporation (DEC), DLJ (research brokerage), 20–21 44, 45, 52, 116 Dobbin, Frank, 232 digital media Dodd–Frank Act, 235, 289 power of, 316 Donaldsen, D., 224–225 digital platform companies Donaldson, Bill, 20 technological and economic Dosi, Giovanni, 191 domination, xxviii dotcom/telecom bubble, 16, 54, 174, digital revolution 175, 189 challenges to the state, 294–295 Berkshire Hathaway and Tiger Group cultural frictions, 297 outcomes compared, 193 differences between the best and the bursting of, 23 rest, 310–316 consequences of, 233 economic frictions, 297 corporate stock issues, 226 economic value of Big Data, 304 decline in IPOs, 90 frictions associated with, 295–297 Greenspan Put and, 181 future of economic growth, 302–304 investment which fuelled, 261 globalization and, 328–335 path towards, 53, 86 lack of policy response by the productivity growth, 305 US government, 327–328 termination process, 200 loss of jobs to automation, xxiv TSI international and, 109 market monopoly of the platform within the bubble, 214–217 superstars, 314–316 Dow Jones Industrial Index, 21 monopolies and, 298 Dragon software, 51 political spillovers, 300–302 Dred Scott decision, 251 power of digital media, 316 Drew, Daniel, 221 productivity and, xxvii–xxviii Dreyfus, H., 49 productivity puzzle, 302, 304–310 Dreyfus, S. E., 49 regulation of the gig economy, DRI (Data Resources, Inc.) Model, 36 298–299 DSL (Digital Subscriber Line), 216 regulatory frictions, 297 Du Pont, 254 stage of development, xxvi dual economy, 319–320 state and, 294–316 Dun & Bradstreet, 109 technological friction, lack of, 296 Dunlop Rubber Company, 168 timescale of, 302–304 DuPont, 21, 26, 84, 98, 255 valuing ventures, 299–300 Durfee, Bradford, 247 Digital Subscriber Line (DSL), 216 Dyson, Esther, 118, 133

405 / Index

East India Company, 157 developments in modeling methodology, Eatwell, John, 210 355–356 eBay, 213, 223 distinction between “risk”, Eberstadt & Company. See F. Eberstadt “uncertainty” and “ignorance”, 355 & Co. drivers of new thinking, 350–352 Eberstadt, Ferdinand empirical shift in economic author and, 25–26 scholarship, 357 baby blue chips and, 26 future prospects, 371 controlling management style, 26 influence of the EMH and REH, 325 death of, 26 insights from other social sciences, Eliot Janeway on, 25 370–371 founding of F. Eberstadt & Co. by, 24 inventing new financial the deal business, 102 macroeconomics, 363–366 See also F. Eberstadt & Co. new economic ideas, xxxiii–xxxiv Eberstadt Report, 25 new thinking and approaches, 354 Eccles, Marriner, 283 next new economy, xxxii–xxxiii Eckstein, Otto, 36 recognition of the limitations of eCommerce, 137, 303–304, 310, 371 traditional models, 354–355 econometrics research to support reconstruction of cliometrics, 223–225 the discipline, xxxiv, 353–354 database problem, 38–39 See also Keynesian economics; limitations of models, 36–39 neoclassical economics; neoliberal objections of Keynes, 36–38 economics Economic Advisory Council (EAC), 278 Economics of Welfare (Pigou), 326 Economic Consequences of the Peace, economies of scale, 296 The (Keynes), 274 Economist, The, 165, 219 economic frictions Economy Act of 1933, 281 consequences of digitalization, 297 ECSoft, 108–111 economic growth EDI (eletronic data interchange), 108–109 future of, 302–304 Edison, Thomas, 303, 310 Economic Innovation Group, 336 Eeckhout, J., 335–336 economic models efficiency inability to predict the Global Financial as the enemy of innovation, 352–357 Crisis, 326–327 efficiency of transactions Economic Policy Institute, 330–331 loss of informational efficiency, 67 economic theory Efficient Market Hypothesis (EMH), 29, influence on the Three-Player Game, 189–190, 323, 352, 357, 366 323–328 consequences of the super-bubble, 188 economics questioning its assertions, 28 adaptation in an uncertain reconstitution of economics, 325 environment, 366–368 Eichengreen, Barry, 289 challenge of randomized controlled Eisenhower, Dwight D., administration, trials (RCTs), 370–371 43, 321 collaboration with other disciplines, elasticity of demand, 324, 362–363 370–371 elasticity of substitution, 324, 362–363 consequences of the Global Financial Electric Lighting Act of 1882, 166 Crisis, xxxiii–xxxiv electrification, 301 consequences of the super-bubble, 188 Brush Boom, 165–167 data analysis methodologies, 371 challenges for early adopters, xxvii

406 / Index

electrification (cont.) Erie Canal, 213, 218, 250 funding of, 227 ERISA regulations, 86 electronic data interchange (EDI), 108–109 EST (self-empowerment movement), 66 electronics boom of the 1960s, 174 Ethernet networking protocol, 45 Electrophone Company, 212 Eurodollar markets, 18, 71 Ellison, Larry, 123 European Central Bank, 290 emerging market debt, 175 European Commission, xxviii, 298, 299 emerging markets European Union residential property boom, 175 General Data Protection Regulation, 315 EMH. See Efficient Market Eurozone, 246 Hypothesis (EMH) Evans, Michael, 36 Employee Retirement Income Security Evans, Morier, 164 Act (ERISA), 86 Evans, Peter, 242 employment. See full employment Evnin, Tony, 100 EMW Ventures, 102, 103 exchange-traded funds (ETFs), 67, 92, 337 Encina, 136 expert systems, 49 End of Globalization, The (James), 334 externalities energy crisis. See oil crisis of 1973 of information, 201 Engine Not a Camera, An (MacKenzie), learning, 191 183–184 negative, xxxi engineering workstation, 45 network, 297 England. See Great Britain positive, xxxi, 210 Enron, 115 Extraordinary Popular Delusions and the enterprise software Madness of Crowds (Mackay), 188 transformation of, 144–152 Exxon Enterprises, 105 enterprise software industry, xxix entrepreneurs F. Eberstadt & Co., 16 Schumpeter on, 81–82, 83–84 founding of, 24 equilibrium franchises of, 26 general equilibrium model, 183 inventing the post-venture private market economy and, 4 placement, 30–35 in neoclassical economics, 4, 9 investment research at, 26–28 equity-based compensation new Eberstadt, 26–28 rise of, 115–117 sale to Robert Fleming & Company, 73 equity markets shift from agent to venture capital princi- access to, 97, 146 pal, 55–56 bubbles and, 190, 210 transformation of, 24–28 digital technology and, 229 Fabrizio, Kira, 44 influence on venture returns, 86 Facebook, xxvi, xxviii, 63, 92, 94, 151, liquidity provision, 32, 57, 228 305, 313, 314, 361 no one knows enough, 199 Failure of Capitalism, A (Posner), 369 pricing versus fundamental value, 191 “Failure of Market Failure, The” (Hutton regulation, xxix and Schneider), 264–265 returns compared to venture capital, 88 “FailureofMarketFailure,The” (Kay), speculation and, 90, 177 264–265 transactional efficiency, 90 Fama, Eugene, 190 transformation of, 91, 194 Treasury dogma and, 291 volume of transactions, 195 Farmer, Doyne, 40–41 Erhard, Werner, 66 Fazzari, Steven, 208–209

407 / Index

FDIC. See Federal Deposit Insurance First Boston, 18 Corporation fiscal austerity. See austerity fear of missing out (FOMO), xxix, 92 fiscal stimulus Federal Deposit Insurance Corporation effects under various conditions, (FDIC), 70, 116 357–359 Federal Express, 32 financial crisis and, 357–359 Federal Reserve, 22, 23, 70, 102, 181, 236, response to financial crisis, 290–291 283, 290 Fischer, Stanley, 236 Field, Alexander, 309–310 Fiske, Jim, 221 Fields, Mike, 118–120, 122, 123 Fitch Ratings, 290 finance fixed costs economics and, 17 Fred Adler on, 67 evolving discipline, 17 Fogel, Robert, 223–225 post-World War II (US), 19 Foley, Duncan, 40–41 research work in, 353–354 Ford, Henry, xxvii, 226 See also modern finance theory Ford Motor Company, 109 Financial Accounting Standards Board, 94 Forrester, Jay, 39 financial capitalism Foster, Stephen, 224 Three-Player Game and, 3, 4–5 Foster, William, 281 view of Braudel, 155 Founder’s Common Stock, 68 view of Sibley, 156–157 Fox News, 316 waves of speculative boom and bust, France 155–157 financing of the Canal du Midi, 249 financial crises gold standard and, 280 effects of fiscal stimulus, 357–359 historical bubbles and crashes in, financial industry 157–163 re-regulation after crashes, 234–237 joint stock investment banks, 164 Financial Instability Hypothesis, 73, 179 railroad system, 214 financial markets Frankenberg, Bob, 135, 136 bubbles and, 143 Franklin, Benjamin, 247 herd-following by, 88 free market, 268 informational inefficiency, 206 free trade, 64 Keynes and, 16 conditions for, xxxi modern finance theory and, 183 Friedman, Milton, 268, 286, 321 noise trader risk, 192 “From Micro to Macro via Production pursuit of economic efficiency, 67 Networks” (Carvalho), 362 rational agents and, 189 Frydman, Roman, 202–203, 207 reflexivity in, 201 Fugitive Slave Act, 251 state and, 249, 292 full employment structural change, 22 consequences of, 321–323 uncertainty and, 32 fundamental value volatility, 70 definition, 191 See also bubbles and crashes; equity high-frequency trading and, 195 markets uncertainty inherent in, 28–30 Financial Times, 236, 318 valuation of companies and, 28–30 financialization of the American economy, 337–338 GAAP (generally accepted accounting Financing Innovation in the United States principles), 67 (Lamoreaux and Sokoloff), 229 Gaddis, John Lewis, 6

408 / Index

Galbraith, John Kenneth, 188, 282 repeal in 1999, 182 Gale, Douglas, 178 Global Crossing, 215 game theory, 201 Global Financial Crisis, 34, 41, 63, 90, Gartner, Gideon, 53 162, 265, 266 GE (General Electric), 21, 44, 66, 84, 98, austerity response to financial crisis, 228, 254 289–293 Genentech, 51, 57, 58 big government and, 326–327 general equilibrium model, 183 consequences for economics, 363–366 general-purpose technology (GPT), 213 consequences of, xxiii General Theory of Employment contributing factors, 326–327 (Keynes), 5 credit bubble and, xxxiii General Theory of Employment, Interest decline in IPOs and, 90–91 and Money, The (Keynes) fiscal stimulus response in Asia, approach to economic problems, 14–15 290–291 beauty contest analogy for investment, market failure and, 264–265 201–202 new economic ideas and, xxxiii–xxxiv contribution to behavioral range of academic literature, 177 economics, 352 response of China, 342–343 coordination failure, 364 Global Settlement, 54 on influences on employment, 276 global systemically important banks on the long-term investor, 269 (G-SIBs) power of ideas, xxxiv leverage of, 234–235 role of the state in times of financial global warming. See climate change cirsis, 270–271 globalization, 267 uncertainty and the financial democracy and the nation state, 328 markets, 32 digitalization and, 328–335 uncertainty in investment decision facts and figures, 328–329 making, 15 stresses caused by episodic generally accepted accounting principles waves of, 171 (GAAP), 67 tecnological innovation and, xxiii–xxiv Germany, xxx Three-Player Game and, xxiii–xxiv banking system, 342 Glorious Revolution of 1688, 346 destruction related to the two World GM (General Motors), 21 Wars, 348 go-go stock market, 174 gold standard and, 280 gold standard, xxxi, 270, 271, 278, 290 Landesbanken, 161 abandoned by Britain, 280 political regime in 1933, 335 Goldberg, Michael, 202–203, 207 response to climate change, 327 Goldman, William, 199 route to industrial leadership, 347–348 Goldman Sachs, 18, 52, 69, 70, 136 Third Reich, 283–285 Goodman, George, 19 Gerstle, Gary, 327 Google, xxviii, 63, 92, 94, 136, 147, 151, Gerstner, Lou, 117 213, 223, 296, 305, 314, 361 Ghironi, Fabio, 356 book publishers and, 296 GIBCO, 61 fine from the European Gibson, William, xxvii Commission, 298 gig economy Google Cloud, 312 regulation of, 298–299 Gordon, Robert, 302–304 Giles, Ed, 26–28, 31, 53–54, 61, 98 Gorodnichenko, Y., 359 Glass–Steagall Act, 17, 70–71, 234, 289 Gould, Jay, 221

409 / Index

government Greenspan, Alan, 23 investment in science Greenspan Put, 181, 187 and technology, 42–44 Gross, Stewart, 130 Graduate, The (film), 84 Grossman, Sanford, 189, 195 Grant, Albert, 164 Gurley, Bill, xxix graphical user interface, 128 Great Britain Haldane, Andy, 193–194, 311 abandoning the gold standard, 280 Hambrecht & Quist, 52 First Industrial Revolution, 346–347 Hamilton, Alexander and the government policy paralysis Hamiltonian tradition, 245–250 (1929–1931), 268–280 Haney, Glenn, 68 historical bubbles and crashes in, Hansards and the Hanseatic League, 7, 157–163 Harcourt, Bernard, 243–244 National Health Service, 264 Harriman, Averell, 24 path to democratic capitalism, 346–347 Hart, David, 256, 321 Railway Manias, 163–164, 218–220 Hart, Oliver, 355 weakness of the government responsible Harvard Business Review, 315 for Brexit, xxxi Harvard Business School, 17 Great Crash, The (Galbraith), 188 Harvard University, 13, 15, 257, 358 Great Depression, xxxi, 16, 17, 86, 162, Hayek, Friedrich, 80, 321, 351 178, 334 Hearst, William Randolph, 316 compared with the Great Recession, hedge finance, 179 288–289 hedges against uncertainty, 61–64 liquidationist theory, 267 Cash and Control, 62–64 New Deal in the United States, 280–283 Heller, Andy, 118 outcomes of state responses to, 285–287 Heller Ehrman (law firm), 68 policy paralysis in the British govern- Henderson, Hubert, 278–280, 291 ment, 268–280 Henry IV (Shakespeare), 237 responses of governments to, 265–268 Hercules (company), 53–54 rise of the Third Reich in Germany, heuristics, 203, 368 283–285 Hewlett-Packard, 72, 110, 116 Great Firewall of China, 296, 346 Hirschman, Albert, 14 Great Horseless Carriage Company, 168 Hitler, Adolf, 287, 288 Great Moderation, xxiii, 175 Third Reich, 283–285 Great Recession, 34, 266 Hobbes, Thomas, 5, 203 compared with the Great Depression, Hogan, John, 60 288–289 Holmstrom, Bengt, 355 slow recovery from, xxiii, 358 Honduras, 165 Great Reform Act of 1832, 347 Honeywell, 44 Great Society, 13 Hong, Harrison, 197 Great Transformation, The (Polanyi), 243 Hoover, Herbert, administration, Greece, 292 266–267, 281 green economy, 318 associationalism, 256 clean energy investment in China, 345 hopeful monsters, 30, 34, 90, 147 lack of US government policy on, Hopkins, Richard, 277 327–328, 338–339 Hornbeck, R., 224–225 lack of US involvement, 320 Hornblower & Weeks, 226 next new economy, xxxii–xxxiii House of Morgan, 70 Green Golden Age, 338 House of Morgan, The (Chernow), 18

410 / Index

Howitt, Peter, 191 income inequality Hughes, Thomas P., 166 productivity and, xxviii Humana, 102, 103 index funds, 67, 92, 337 Hume, David, 38, 203 agency problem and, 116 Hutton, Will, 264–265 Industrial Revolutions, 329 First Industrial Revolution, 241, 254 I theory of money, 364 First Industrial Revolution in Britain, IBM, 21, 26, 69, 116 346–347 AS400 computer, 117, 118 Second Industrial Revolution, 1, 226 CICS (Customer Information Control timescales of effects, 302–304 System), 132, 136 inequality of wealth and income commercial developments in the populism and, 332–334 1960s, 260 INET. See Institute for New Economic competition from client–server systems, Thinking (INET) 45–46 inﬂation competition from Oracle, 105–106 unemployment and, 322–323 Department of Defense contractor, 259 information asymmetry, 209, 351, 354 Department of Defense research information externality, 201 funding, 260 information technology (IT) dominance of the computer industry consumerization of, 148 in the 1980s, 44–45 infrastructure as a service, 147 emergence of commercial activities, 41 platform as a service, 147 inability to exploit new technolo- role in the bursting of the super-bubble, gies, 341 186–188 loss of monopoly of punched cards, 131 Software as a Service (SaaS) model, network externalities, 313 145–152 opening up of, 117–120 transformation of enterprise software, requirement to sell rather than lease its 144–152 products, 131 See also computer technology; digital research laboratory, 255 revolution; ICT sector. System 360 development, 260 initial coin offerings (ICOs), 93–94 unbundling software from initial public offerings (IPOs), 91 computers, 132 biotechnology IPOs, 99 IBM datacenter, 111 China, 343–344 IBM personal computers conditions which close the IPO operating system, 105 window, 32 use of Intel microprocessors, 105 decline since the Global Financial Crisis, Ickes, Harold, 281–282 90–91 ICT sector mini-bubble of 1983, 174 extent of venture capital funding, 96–97 nature of venture-backed IPOs, 91 See also information technology (IT) opening up of the market in 1980, 51 illiquid securities, 363 innovation IMED, 33 efﬁciency as the enemy of, 352–357 IMF (International Monetary Fund), 64 legacy industries and, 98–99 IMI (Industri-Matematik), 111–112 speculation and, 229–232 immigration waves of innovation, 218–229 attitudes towards, 330–331 innovation complementarities (IC), 213 economic effects of, 330–331 Innovation Economy, 1–10, 90 income distribution inequality, 359–361 allocation of resources and, 190–191

411 / Index

BEA Systems and, 139–143 Internet Bubble, xxvii, xxix, 54, 294 benefits from creative destruction, interstate highway system, 214 350–352 investment firms China as potential leader, 340–349 brokerage commissions, 71, 90 conditions for state intervention, going public, 70 262–263 hierarchy of, 17–18 downstream features, 2–3 May Day 1975 and, 90 effects of World War II, 257 on old Wall Street, 18–19 followers becoming leaders, 340–349 investment research funding of innovation, 1–2 conflicting interests in, 54 importance of Cash and Control, 6–7 development of, 51–54 leaders becoming followers, 335–339 F.Eberstadt & Co. and, 26–28 mercantilism, 7–8 as a proprietary asset, 22 neoclassical economics and, 8–9 research brokerage, 20–21 New Growth Theory and, 190–191 investors role of the state, 3 fear of missing out (FOMO), xxix speculation and, 2–3 passive institutional investors, xxix states’ loss of political authority, INVNT/IP Consortium, 340 xxx–xxxii IPOs. See initial public offerings (IPOs) threat to United States leadership IT. See information technology (IT) position, 320 tolerance of waste, 90 J.H. Whitney & Company, 102 upstream dependence on research J.P. Morgan (bank), 7, 70, 185, 186 investment, 77–78 historical conservatism, 70–71 upstream features, 1–2 move into investment banking, 70–71 waste and, 1 J.P. Morgan Chase, 63 innovator’s dilemma, 48, 117, 138 Jackson, Andrew Insider Lending (Lamoreaux), 246 Jacksonian Reversal, 250–252 insider transactions, 200–201 James I (England), 157 Institute for New Economic Thinking James, Harold, 334–335 (INET), 354, 363 Janeway, Eliot, 242–243 Institutional Investor magazine, 21 on Ferdinand Eberstadt, 25 institutional investors Janeway, William H. herd-following by, 88 arrival at F. Eberstadt & Co., 16 non-rational expectations, 198 arrival at Warburg Pincus, 101–107 rise of, 19–20 association with John Seely Brown institutionalization of the stock market, (JSB), 47, 48–50 194–195, 337 collaboration with Fred Adler, 51–52, Intel, 45, 65, 105, 261 72–73 intellectual property doctoral research, 13–14, 16–17, 25 appropriation by follower nations, 340 on econometric models, 38–39 intellectual property rights, 261 Hyman Minsky and, 180 interest rates influence of Keynes, 14–15 effects of historically low levels, xxx internship during LBJ administra- International Monetary Fund (IMF), 64 tion, 13 international trade, xxiv inventing the post-venture private populist target, xxiv placement, 30–35 internet mentor Ferdinand Eberstadt, 25–26 foundation of, 259 at Robert Fleming & Company, 77

412 / Index

Janeway, William H. (cont.) gradual encroachment of ideas, 371 theorist-practitioner of financial Hubert Henderson and, 278–280 economics, 10 imperfect knowledge of the investor, threat to career over BRL crisis, 58–60 85–86 valuation of companies, 28–30 on influences on employment, 276 W. A. Lewis and, 320 investment and speculation, 85–86 Japan, 290 Lloyd George and, 274 banking system, 342 on the long-term investor, 269 keiretsu, 340 objections to econometrics, 36–38 Jardine Matheson, 73 Paradox of Thrift, 364, 370 JAWS (just another workstation) war, 104 perverse incentives of the public equity Jenrette, Dick, 20 market, 87 Jensen, Michael, 115 plan to pay for the war, 20 Jewett, Frank, 256, 257 power of ideas, xxxiv Jewish Museum, 102 prospective yield of assets over their Johnson, Lyndon B., 272, 321 whole life, 141 financial protectionism, 18 rationale for fiscal stimulus, 275 Great Society and, 13 role of the state in times of financial JSB. See Brown, John Seely cirsis, 270–271 Jumpstart Our Business Startups (JOBS) stock market valuation driven by Act, 91 speculation, 141 junk bonds, 175, 216, 233 on uncertainty, 5–6 on uncertainty in human behavior, 204 Kaffir Circus, 167–168 uncertainty and the financial markets, 32 Kahn, Richard, 15, 270, 279 unemployment and debt-financed invention of the multiplier public works, 266 concept, 358 why bubbles matter, 205 Kahneman, Daniel, 196, 368 world of the financial markets, 16 Kalanick, Travis, 95 Keynesian economics Kalecki, Michael, 321–323 Bastard Keynesians, 16, 323–324 Kaplan, Steve, 88, 95 fiscal stimulus policies in peacetime, Kapoor, Mitch, 68 286–287 Kaufman, Kit, 68 neoclassical synthesis and, 36 Kay, John, 264–265 New Deal and, 283 Keet, Lee, 108, 109–110, 111 relevance to today’s crisis, 290–291 Kennedy, John F., administration, 286 socialization of investment, 288 Keynes, John Maynard, 78, 140, 203 in time of war, 286–287 academic rediscovery of Keynes’s uncertainty in investment decision bridge, 207–211 making, 15 approach to economic problems, war of the two Cambridges, 15–16 14–15 Keynesian waste, 10 attack on the Treasury dogma, bad, macroeconomic waste, 353 276–277 focus on ways to reduce, 357–359 beauty contest analogy for investment, minimizing, 344 201–202 neoclassical economics and, 9 bridge between speculation tolerance of, 292 and enterprise, 206–207 Kickstarter, 92 coordination failure, 364 Kindleberger, Charles, 177, 178–179 General Theory of Employment, 5 King, Scott, 58

413 / Index

Kingsbury Commitment, 132 Life Technologies, 61, Klein, Lawrence, 36 “Limits of Arbitrage, The” (Shleifer and Kleiner Perkins, 100, 103 Vishny), 192–193 knowledge spillover effects, 262 Limits to Growth, The (Meadows, Korean War, 20, 43, 258 Meadows, Randers and Behrens), 39 Kressel, Henry, 44, 215–217 Lincoln, Abraham, 250, 252 Krugman, Paul, 14, 15, 279, 290 Lindbergh, Charles, 227 Krupp, 284 Linen Company, 158 Kuhn, Loeb, 18, 19, 69, 102 liquidity Kurz, Mordecai, 196 post-venture private placement and, Kynaston, David, 161, 164–165, 167, 30–35 168–169 sources in the banking system, 364 threats to, 31–32 labor markets valuation of illiquid assets, xxix–xxx digital revolution and, xxvi liquidity preference, 290 laissez-aller economics, 7 liquidity trap, 290 laissez-faire economics, 7, 174, 182, LISP computer language, 47 253, 270 List, Friedrich, xxxi, 7–8, 64, 344 Lamoreaux, Naomi, 69, 229, 246, 253 Lloyd George, David, 269, 271, Landes, David, 348 272–273, 279 Landesbanken, 161 character of, 273 Landy, Joe, 215–217 Keynes and, 274 Lasersohn, Jack, 55, 65 Lloyd George Fund, 273 Latin America, 161, 334 pledge to overcome unemployment, Laugerud, Terje, 110 274–276 law and economics, 326, 369, political entrepreneurship, 273 Law, John, 158–160 political opposition, 274 Lawson, Harry, 168–169 Lo, Andrew Lawson, Tony, 6 Adaptive Markets Hypothesis, 366–368 Lazard, 102 Lockheed Martin, 216–217 Lazonick, William, 338 Loeb, Solomon, 102 LeCun, Yann, 313 Loehmann’s, 52 Leimdorfer, Martin, 111 Lombard Street (Bagehot), 162 lender of last resort, 22, 162, 163, London Stock Exchange 182, 270 Battle of Throgmorton Street, 168 Leontief, Wassily, 361–362 Brush Boom and, 165–167 Lerner, Josh, 261, 341 Rubber Fever, 169 Leslie, Mark, 124, 125 South African gold boom and, 167–168 Level 3, 215 waves of speculative fever, 161 Level One, 215–216 Long Term Capital Management, 23, 181 leverage Loomis, Alfred, 254 banking system, 232–233 Lorenzoni, Guido, 207–208 global systemically important lotteries, 158 banks (G-SIBs), 234–235 Lotus 1–2–3, 68 leveraged buyouts, 89, 105 Louis XIV of France, 249 Levi Strauss opportunity, 58, 61 low-carbon economy, xxi Levy Economics Institute, 180 Lucas, Robert, 190, 291, 323 Lewis, Arthur, 319 Lucas Critique, 323, 325, 326 libertarianism, 25, 242, 298, 300 Luddites, 329

414 / Index

Lufkin, Dan, 20 McKenzie, Michael, 87, 95 Lyft, 314 McNealy, Scott, 136 Meadows, Dennis, 39 M. M. Warburg & Company, 102 Meadows, Donella, 39 machine learning, 48, 313 Means, Gardiner, 115, 116 improving algorithms, xxviii Meckling, William, 115 in the cloud, xxviii Mehrling, Perry, 23, 73 prospects and limitations, 47–48 Mellon, Andrew, 266–267 value of more data, xxviii Mendoza, E. G., 64 See also artificial intelligence (AI) mercantilism, 7–8, 249 Mackay, Charles, 160, 188 Mercator, 109 MacKenzie, Donald, 183–184 mergers and acquisitions Macmillan Committee on Finance and charging for advice, 69 Industry, 277 Merrill Lynch, 18, 19, 69 “Macro Needs Micro” (Ghironi), 356 Merton, Robert, 183 macroeconomics Metcalfe’s law, 211 inventing new financial macroeco- Mexico nomics, 363–366 US immigration issue, 331 mail order industry, 222–223, 303 Meyer, André, 102 malefactors of great wealth, xxii Meyer, Phil, 46 Manhattan Institute, 330–331 MicroPro International, 65–69 Manhattan Project, 258 Microsoft, xxviii, 63, 134, 147, 151, 361 manias MS-DOS, 105 credit system and, 177–180 Windows, 105, 133 Manias, Panics and Crashes Microsoft Azure, 312 (Kindleberger), 177 Microsoft Word, 68 Marcus, Gary, 313 migration, xxiv Mark Twain Banks, 180 Mill, John Stuart, 197 market economy Mind over Machine (Dreyfus and Three-Player Game and, 3, 4 Dreyfus), 49 market failure mining state intervention and, 8, 262–263 South African gold boom, 167–168 state response to, 265–268 Minsky, Hyman, 186 market risk, 57, 80, 100, 148, 149 author and, 180 marketing Big Government capitalism, xxiii channels, 89, 150 big-state capitalism, 9–10, 289 ineptitude of AT&T, 133–134 effects of less regulatory control, 182 Markowitz, Harry, 183 Financial Instability Hypothesis, Marsh & McLennan, 27 73, 179 Marshall, Alfred, 367 on the neoclassical synthesis, 16 Martin, Nancy, 138 regulation of the financial system, 235 Marx, Karl, xxxiv, 78, 140, 299 role of the central bank, 163 view of capitalism, 80–81 stabilizing effect of big-state capitalism, Mass, Nathaniel, 39, 40, 41 180–181 Massachusetts Institute of Technology. Mississippi Bubble, 158–160 See MIT Mississippi Company, 159 Maxwell, James Clerk, 254 MIT, 13, 15, 257 Mazzucato, Marianna, 294 Artificial Intelligence Laboratory, 46 MCI, 117, 138 Industrial Liaison Program, 46, 58

415 / Index

System Dynamics National Model, Nanda, Ramana, 209 39–42 nanoscience and nanotechnology, 98 Modern Corporation and Private nanotechnology, 84 Property, The (Berle and Means), 115 Napoleonic Wars, 161, 249 modern finance theory, xxxiii, 22, 72, 244 NAS. See National Academy bubbles and, 182–186 of Sciences (NAS) challenge of market reality, 188–191 NASDAQ, 112, 136, 193 credit default swaps and, 185–186 creation of, 17 lack of relevance to practice, 72 NASDAQ bubble, 222 Monetary History of the United States nation state (Friedman and Schwartz), 286 democracy and globalization, 328 monetary policy, 31, 34, 272, 286, National Academy of Sciences (NAS), 358, 365 252, 255, 256, 327 Money Game. The (Smith [pseud.]), 19 National Advisory Committee for monopolies Aeronautics, 257 digitalization and, 298 National Association of Security market monopoly of the platform Dealers, 17 superstars, 314–316 National Defense Education Act monopoly profits, 3, 79, 172 (1958)., 43 AT&T, 142, 255 National Defense Research Committee DuPont, 255 (NDRC), 258 IBM, 48, 118, 129, 255 National Industrial Recovery Act, 281 New World trade, 158 National Institutes of Health (NIH), RCA, 255 57, 255 redistribution of, 241 creation of, 43 Xerox, 255 funding constraints, xxiv Mont Pelerin Society, 321, 322, National Interstate and Defense Highways 323, 371 Act of 1956, 43, 214 Montgomery, Henry, 66 National Research Council, 255–256 Montgomery Ward, 222–223, 303 National Science Foundation (NSF), 43 Monti, Mario, 293 National Security Act of 1947, 25 Moody, John, 170–171, 172 National System of Political Economy, moral hazard, 163, 236 The (List), 8 Morgan, J. P. (financier), 69, 222, 225 National Venture Capital Association Morgan Stanley, 17, 18, 52, 53 (NVCA), 86 institutional change, 69–70 nationalism separation from J.P Morgan bank, 70 civic and racial types of, 327 Morrill Act, 251, 252, 255 nativist movements, 331, 332 mortgages NCR, 44 securitization, 23 NDRC. See National Defense Research Mosley, Oswald, 279 Committee (NDRC) Motorola, 105 Neal Larry, 161 Mowery, David, 44, 262–263 Nelson, Richard, 84, 98, 104, 261–262 multiplier neoclassical economics, 15, 367, 370 estimating the size of, 271 disconnection from reality, 206 invention by Richard Kahn, 358 efficiency, 2 rediscovery of, 357–359 failure of, xxxiii Musk, Elon, 318 Innovation Economy and, 8–9 mutual funds, 20, 22, 27, 194 model of bubbles, 192

416 / Index

neoclassical economics (cont.) Nobel Prize in Physiology or Medicine, 61 neoclassical synthesis, 15–16, 36, “Noise Trader Risk in Financial Markets” 323–324 (DeLong, Shleifer, Summers and neoclassical growth theory, 191 Waldmann), 192 neoliberal economics, 244, 324 noise traders, 192, 237 neoliberalism, 335 Novell, 134–136 neonationalism, 335 Nuance, 51 net present value NVCA. See National Venture Capital future cash flow and, 300 Association Netscape, 137, 214 Nye, Joseph, 212 network externalities, 297 NYSE. See New York Stock Exchange network theory, 362 networks Obama, Barack, administration, 327 financing new networks, 211–214 attitude to science, xxv Networks of Power: Electrification in Obamacare. See Affordable Care Act Western Society, 1880–1930 object transaction monitor (OTM), (Hughes), 166 129–130 Neustar, 217 Odlyzko, Andrew, 219, 220 New Deal, 256, 280–283, 321 OECD (Organization for Economic New Growth Theory, 191 Cooperation and Development), New Republic, 286 xxvii, 310–311, 315 New York Curb Exchange, 170, 228 Ofek, Eli, 200–201 New York Society of Security Analysts, 17 Office of Naval Research, 43 New York Stock Exchange (NYSE), 17, Office of Science and Technology Policy 70, 170 (OSTP), xxv boom in railroad securities, 221 Office of Scientific Research and structure in 1970, 17 Development (OSRD), 42, 43, 258 suspension of its fixed commission Oh, Joohee, 305 schedule (1975), 21 oil crisis of 1973, 21, 32, 36, 322, trusts bubble, 169–173 324–325 Newton, Isaac, 158 Oltman, John, 112–113, 114, 115, 117 Nifty Fifty one-decision stocks, 26 “-onics” boom of the 1960s, 174 NIH. See National Institutes of OPEC, 324 Health (NIH) oil crisis of 1973, 324–325 Nixon, Richard, administration, 21, OpenVision Technologies, 120–124 31, 324 merger with VERITAS, 124–126 Nobel Memorial Prize in Economics Oppenheimer & Company, 53 Angus Deaton, 370 Oracle, 105–106, 112, 119, 122–123, Daniel Kahneman, 196 141, 151 Eugene Fama, 190 adoption of the platform, 120 Friedrich Hayek, 80 O’Reilly, Tim, xxviii, 295, 312 George Akerlof, 351–352 OSRD. See Office of Scientific Research Jan Tinbergen, 36 and Development (OSRD) Kenneth Arrow and Gerard OSTP. See Office of Science and Debreu, 62 Technology Policy (OSTP) Oliver Hart and Bengt O’Sullivan, Mary, 226 Holmstrom, 355 Otis and Company, 24 Robert E. Lucas Jr., 190 OTM (object transaction monitor), Wassily Leontief, 361 129–130

417 / Index

outsourcing political authority transformational, 113 states’ loss of, xxx–xxxii overtrading political spillovers bubbles and, 197 consequences of the digital revolution, 300–302 Pacific Railroad, 251 Political Trilemma, 328 Pacific Railway Act, 251 Ponzi finance, 179, 184, 197 Palo Alto Research Center (PARC), 341 populism, 295 author’s access to, 48 Brexit and, xxiii, 293 early innovations, 48–51 distribution of resources and, 360 Ethernet and, 45 early railroads and, 301, return on innovations from, 48–51 ethno-national cleavage, 334 Paradox of Prudence, 364, 370 failure of neoclassical economics and, Paradox of Thrift, 364, 370 xxxiii Paraguay, 165 immigration issues, 331 Paris Climate Accord, xxxi, xxxii, 338 income/class cleavage, 334 Paris School of Economics, 359 inequality and, 332–334 Park, Andreas, 202 left-wing populism, 334 Parliament Act of 1911, 272 right-wing populism, 334 Pasinetti, Luigi, 361–362 targeting international trade, xxiv Patent Act of 1836, 253 targets of, xxiv patents Trump and, xxiii, 293 appropriation of intellectual unemployment and, xxiv property, 247 Posner, Richard, 369–370 monopolies based on, 255 Post-Venture Capital, LP, 55 systems in the US and Britain, 247–248 post-venture private placement, Pavan, Alessandro, 207–208 30–35, 122 Pendray, Jack, 108, 109–110 Princeton University, 13, 286, 334 Pennsylvania Power and Light, 301 Principles of Economics (Marshall), 367 pensions, 270, 272 Procter & Gamble, 109 Pepper, Bob, 215–216 product market rivalry effect, 262 Pepys, Samuel, 158 production networks, 362–363 Perez, Carlota, 81–82, 229–232, productivity 320, 338 digital revolution and, xxvii–xxviii Personal Software, 65 productivity puzzle, xxvii–xxviii Pesaran, Hashem, 38, 189 digital revolution and, 302, 304–310 Petersen, Bruce, 208–209 Prospect Theory, 196 Pfizer, 26 protectionism, 7, 244, 249, 250, 267 Phillips Curve American System and, 251 apparent breakdown of, 322–323 as self-insurance, 64 Picketty, Thomas, 360 conditions to return to free trade, xxxi Pieper, Roel, 135 Johnson administration, 18 Pigou, Arthur, 325, 353 pseudo-market, 33 Piketty, Thomas, 308 psychological biases, 354 Pinchot, Gifford, 301 public market equivalent (PME), 88 Pincus, Lionel, 102–103 Public Works Administration (PWA), Pisano, Gary, 97–98, 100 281–283 plastics industry, 98 public works policy Polanyi, Karl, 243 evolution of, 275

418 / Index

Putnam Group, 27 frictions caused by the digital PWA. See Public Works revolution, 297 Administration (PWA) REH. See Rational Expectations Pyramid, 129 Hypothesis (REH) Reinhart, Carmen, 174, 177, quantitative easing, 290 178, 292 quantum internet rents, economic. See monopoly proﬁts research in China, 346 Report on Manufactures (Hamilton), 245 Representation of the People Act of radio 1867, 347 early funding of, 228 Republican Party, 250 Radio Corporation of America. See RCA research and development (R&D) (Radio Corporation of America) Chinese government spending on, 345 railroads exploration and exploitative types, 143 booms in the US, 220–226 industrial research laboratories, 260 corruption during building of, 301 shift to short-term focus, 338 France compared to the US and US government spending, 345 Britain, 214 research brokerage mismanagement of the transcontinen- emergence of, 20–21 tals, 301 residential property boom, 175 populism and, 301, Rey, Helene, 364–365 Railway Manias (Britain), 163–164, Rhodes-Kropf, Matthew, 209 218–220 Riboud, Jean, 46 Ramsey, Frank P., 355 Ricardian equivalence, 278, 358 Rand, Ayn, 242 Ricci, Paul, 50–51 randomized controlled trials (RCTs), Richardson, Matthew, 200–201 370–371 risk rational capital asses pricing model confusion surrounding the term, (CAPM), 183 202–203 distinction from “uncertainty” and Rational Beliefs, 196 ‘ignorance”, 355 rational bubbles, 197 limitations of Value at Risk (VaR) Rational Expectations Hypothesis (REH), models, 354–355 189–190, 323, 352, 357, 358, 366 risk aversion, 203, 290 non-rational expectations of institu- risk management tional investors, 198 credit default swaps, 185–186 reconstitution of economics, 325 Value at Risk (VaR) methodology, RCA (Radio Corporation of America), 44, 184–185 155, 215, 228, 255 Road to Plenty, The (Foster and Department of Defense research fund- Catchings), 281 ing, 260 Road to Serfdom, The (Hayek), 321 Reagan, Ronald, administration, 116, Robert Fleming & Company, 73, 77 132, 244, 292, 324, 326 Robertson, Julian, 193 Reconstruction Finance Corporation, Robertson, Sandy, 52 281, 282 Robertson Stephens, 52 refugees Robinson, James, 346, 348 immigration issues, 331 Robinson, Joan, 16 Regional Bell Operating Companies, 133 Rock, Arthur, 65 regulation Rockefeller, Laurance, 102

419 / Index

Rodrik, Dani, 242, 267, 328, 331, on capitalism, 81–82 333–334, 340 relationship between entrepreneurs and Rogers, Everett, 308 financiers, 140–141 Rogoff, Kenneth, 174, 177, 178, 292 on state intervention in the market Romer, Paul, 191 economy, 256–257 Roosevelt, Franklin D., administration, venture investment failure, 83 xxxi, 25, 280, 301 Schumpeterian Growth Theory, 79–80 New Deal, 280–283 Schumpeterian waste, 30, 256–257 Roosevelt, Theodore, xxii good, microeconomic waste, 353 Rosen, Ben, 53 Innovation Economy and, 9 Rothschild, Unterberg & Towbin, 52 Schwartz, Anna Jacobson, 286 Royal Bank of Canada (RBC), 112 science Rubber Fever, 169 attitude of the Obama administra- Rubenstein, Seymour, 66–67, 68 tion, xxv Rueschemeyer, Dietrich, 242 attitude of the Trump administra- Rule 415, 21–22 tion, xxv Russell Sage Foundation, 368 support from the state, 255–263 Russian debt crisis, 181 technology’s emerging dependence on, Russian default, 23 252–255 Science, the Endless Frontier (Bush), Sabourian, Hamid, 202 42–43 Saez, Emmanuel, 360 Scientific Data Systems, 65 SAGE air defense computer network, Scoles, Myron, 183 259, 260 Scott, Ed, 129, 130, 131, 134–135 Sainsbury, Lord David, 308 Scottish investment trusts, 33 Salesforce.com, 145, 146, 147, 148, 151 Sears Roebuck, 222–223, 303 Salomon Brothers, 18, 69 SEC (Securities and Exchange Samuelson, Paul, 15, 36, 324, 367 Commission), 19, 70 San Domingo, 165 on initial coin offerings (ICOs), 93–94 Sannikov, Yuli, 364 Rule 415 and, 21–22 John Bates Clark Medal, 364 Second Bank of the United States, 246, 248 SAP (software company), 110, 112, 151 Securities and Exchange Commission. Savings and Loan Crisis, 236 See SEC Scansoft, 50–51 securitization of assets, 22–23 Schankerman, M., 262 securitization of credit, 233–234 Scheinkman, José, 189, 196–197, 201 service-oriented architecture (SOA), 139 Schiff, Jacob, 102 sharing economy, xxvi Schlesinger, Arthur, Jr., 248–249 Sherman Act, 169 Schlumberger, 46 Shin, Hyun, 175–176, 187, 197–198, 201 Schmidt, Benno, 102 SHL Systemhouse, 112–115, 116, 138 Schmidt, Eric, 135–136 Shleifer, Andrei, 192–193 Schneider, Philippe, 264–265 Shleifer–Vishny model, 192–193 Schoar, Antoinette, 88, 95 Sibley, Nicholas, 156–157 Schularick, Moritz, 181–182 Siebert, Muriel (‘Mickie’), 19 Schumpeter, Joseph, 78, 140 Siemens, 284 creative destruction, 3, 241, 295 Siemens, Alexander, 166–167 on entrepreneurs, 83–84 Silicon Graphics, 104 innovation in large firms, 341 Silicon Valley, 65, 298 losers from speculation, 167 Silicon Valley socialism, 116–117

420 / Index

Simon, Herbert, 203 STAR (Xerox product), 48, 128 Simsek, Alp, 365–366 start-ups, xxx, 30, 46, 57, 89, 91, 104, Singapore, 290 107, 120 Slater, Samuel, 247 bubbles and, 209 slavery, 251 competition from, 215 Sloan Foundation, 368 eCommerce, 137 small-state capitalism market risk, 57, 80, 100, 148, 149 transformation into big-state reaching sustainable cash flow, 151 capitalism, 9–10 SaaS-driven, 148 Smith, Adam, 4, 169, 197, 243, 267, 268 technology risk, 80, 100, 148, 149 Smith, R., 33 valuation of, 137 SmithKline, 60 state, the Snowden, Philip, 277 actions under the New Deal, 280–283 social media, 310, 371 austerity response to financial crisis, Social Science Research Council, 229 289–293 Softbank, 92 big-state capitalism, 321 Software as a Service (SaaS) model, challenges of the digital revolution, 145–152 294–295 Sokoloff, Ken, 229, 253 delegitimizing the state, 320–323 Solow, Robert, 308 digital monopolies and, 298 Son, Masayoshi, 92 digital revolution and, 294–316 Song, Michael, 343 efforts to delegitimize as an economic Soros, George, 174, 181, 354 actor, 10 reflexivity in financial markets, 201 fiscal stimulus response to financial South African gold boom, 167–168 crisis, 290–291 South Korea Hamiltonian tradition, 245–250 chaelbols, 340 intervention related to market failure, South Sea Bubble, 92, 93, 158–160, 188 262–263 sovereign debt crises, 291 Jacksonian Reversal, 250–252 Spanish-American War, 316 loss of political authority, xxx–xxxii speculation mission-oriented investments, 262–263 dependence of venture capital on, 90–96 outcomes of responses in times of crisis, ever present spirit of, 173–174 285–287 innovation and, 229–232 policy paralysis in the British govern- Innovation Economy and, 2–3 ment (1929–1931), 268–280 See also Unicorn Bubble rationales for state intervention, 8 speculative finance, 179 regulation of the gig economy, 298–299 Speculative Notes (Evans), 164 response to response to market failure, speech recognition technology, 50–51 265–268 Sperry-Univac, 68 responses to the Great Depression and spillover effects, 262 the Great Recession, 288–289 Sputnik, 43, 259 rise of the Third Reich in Germany, Squire, Geoff, 122–124, 125 283–285 stabilization, 359 role of, 241–245 Stabilizing an Unstable Economy support of science, 255–263 (Minsky), 163 technological disruption and, xxiii–xxv stagflation, xxx, 174, 324, 362 technology’s emerging dependence on Stanford science, 252–255 Equality of Opportunity Project, 336 Three-Player Game and, 3–4, 241–245

421 / Index

venture capital’s dependence on, TCP/IP protocols, 259 96–101 Tea Party, xxiii, 292 State Farm Insurance Company, 33 Teapot Dome, 288 State of Wisconsin Investment Board technological innovation (SWIB), 114–115, 116 development of green technologies, Stein, Jeremy, 197 xxxii–xxxiii Stiglitz, Joseph, 189, 195, 209, 353 disruptive effects, xxiii–xxv stimulus, fiscal. See fiscal stimulus emerging dependence on science, stock buybacks 252–255 shareholder returns and, 338 financing technological infrastructure, stock market 229–232 institutionalization of, 194–195, 337 globalization and, xxiii–xxiv Stockholm Stock Exchange, 112 state and, xxiii–xxv Strategic News Service, 340 Technological Revolutions and Financial structural economic dynamics, 361–363 Capital (Perez), 229–232 Struggle for Survival, The (E. Janeway), technology risk, 57, 80, 100, 148, 149 25, 242–243 technology spillover effects, 262 subprime mortgages, 186, 329 Telecommunications Act of 1996, 214 bursting of the super-bubble, 188 telegraph system, 225 substitution telephone industry, 301–302 elasticity of, 324, 362–363 Temin, Peter, 289, 319 Sullivan, Pike, 26–28, 31, 57, 73, 107 Tencent, 92, 344 Summers, Lawrence, 192, 358–359 Tennessee Valley Authority, 256, 301 Sun Microsystems, 45, 104, 124, 128, 129, Tesla, 318 131, 135–136, 137 Texas Instruments, 260 Sun Microsystems Federal, 129 Thailand, 290 super-bubble, xxiii, 174–176 Thatcher, Margaret, 244, 324 bursting of, 186–188 Third Reich, 283–285 credit default swaps and, 185–186 This Time is Different (Rogoff), 177 IT revolution and, 186–188 Thoma, Mark, 363 modern finance theory and, 182–186 Three-Player Game, 143 role of big-state capitalism, 180–182 competition and, 170 timescale of, 180 dark side of, 317–349 supply chain disruptions, 362 definition, xix Supreme Court (US), 251, 319 delegitimizing the state, 320–323 Swainson, John, 136 dynamics of, 5 Swanson, Bob, 56 effects of current disruptions, xxi–xxiii Swiss banks, 33 evolution in China, 343, 348–349 Sylla, Richard, 246, 250 financial capitalism, 3, 4–5 Symantec, 126 fragility of, 266 System Dynamics National Model, 39–42 globalization and, xxiii–xxiv Syverson, Chad, 307, 311 Hamiltonian tradition, 245–250 influence of economic theory, 323–328 Taft–Hartley Act of 1947, 321 Jacksonian Reversal, 250–252 Taiwan, 290 market economy, 3, 4 takeover boom, 175 players, 3 Tandem Computer, 32, 135 positive and negative aspects, 5 Task Rabbit, 298 reconfiguring, xxxiv Taylor, Alan, 181–182 rise of big-state capitalism, 9–10

422 / Index

Three-Player Game (cont.) uncertainty role of state leadership, 335–339 bubbles and, 199–204 role of the state, 101, 241–245 decision-making under, 355 shifts in interactions over time, 317–320 distinction from “risk” and state, 3–4 “ignorance”, 355 Tobin’s q and, 205–206 Gaddis on, 6 uncertainty and, 5–6 hedges against, 61–64 Tiger Group, 193 Keynes on, 5–6 Tinbergen, Jan, 36–38 Three-Player Game and, 5–6 Tirole, Jean, 192 Understanding Financial Crises (Allen and Titanic disaster, 212 Gale), 178 Tobin, James, 205 unemployment Tobin’s q, 205–206 debt-financed public works and, 266 Tolerant Systems, 124 inflation and, 322–323 Tooze, Adam, 284 loss of jobs to automation, xxiv total addressable market (TAM), 149 peak level in the Great Depression, xxiii “Towards a Political Theory of the Firm” peak level in the Great Recession, xxiii (Zingales), 370 unemployment insurance, 270 trading Unicorn Bubble, 34–35, 92, 300 influence of computer technology, privileges granted to founders, 94–95 71–72 return of speculation, xxix–xxx Treasury dogma, 276–277, Unicorns, 52, 92 279, 291 valuation, 34–35, 301 Trollope, Anthony, 164, 347 valuation methodologies, 29 Truman, Harry S., administration, 42 valuing ventures, 299–300 Trump, Donald, administration, 320, UniKix, 132–133 330, 331, 335, 340 Union Pacific, 251 attitude to science, xxv United States lack of involvement in the green civic and racial types of national- economy, xxxii–xxxiii ism, 327 political authority and, xxxi fading of the American dream, 336 populism and, xxiii, 293 financialization of the American potential financial consequences, 31 economy, 337–338 rejection of climate change, 338–339 gold standard and, 280 trusts bubble, 169–173, 226, 253 government spending on R&D, 345 Truth About the Trusts, The (Moody), loss of economic dynamism, 335–339 170–171, 172 loss of political authority, xxxi TSI International, 108–109 New Deal, 280–283 Tucker, Paul, 235 Univac, 44 tulip mania (Netherlands), 157 University of Chicago, 192, 243, 307, 323, Tuxedo, 133–137, 142, 341 325, 369 Tversky, Amos, 368 University of Pittsburgh, 47 Twentieth Century-Fox, 102 UNIX operating system, 45, 119, 124, 132, 133 U.S. Steel, 254 Unix Systems Laboratory, 133, Uber, xxvi, xxix, 34, 95, 151, 295, 296, 134, 341 297, 298, 301, 314 US Department of Defense cultural frictions, 297 ARPAnet, 214 network externalities, 297 creation of, 25, 43

423 / Index

funding of technological research, skew in venture capital returns, 95 258–261 VERITAS, 152 investment in science and technology, OpenVision merger, 124–126 43–44 stock price movements, 155 US Department of Energy Versailles Peace Conference, 273 Advanced Research Projects Vickers, John, 234 Agency, 338 Vietnam, 290 lack of recognition of climate Vietnam War, 13, 18, 102 change, 338 Virgil, 35 US Department of Justice, 45 Vishny, Robert, 192–193 Anti-Trust Division, 131–132 VisiCalc, 65, 72 US Digital Service (USDS), xxv VisiCorp, 65, 68, 128 US Environmental Protection Agency VisiOn, 128 lack of recognition of climate Vogelstein, John, xxxiii, 101, 102–103, change, 338 123, 125, 135 US Forestry Service, 252 Volcker credit crunch, 51 US Geological Survey, 252 Volcker Rule, 235 utility in economic theory, 4, 203 Waldmann, Robert, 192 Vail, Theodore, 301 Wall Street valuation of companies after World War II, 19–20 uncertainty in the fundamental value, disruptive events of 1973–1975, 21 28–30 emergence of research brokerage, 20–21 Unicorns, 299–300 from old to new, 17–23 value of illiquid assets, xxix–xxx growth in financial assets, 175 value influence of computer technology on data as source of, xxviii trading, 71–72 sources in the digital economy, xxviii influence of the IT revolution, 187 Value at Risk (VaR) methodology, religious segregation, 18–19 184–185 rise of institutional investors, 19–20 Value at Risk (VaR) models Rule 415 and, 21–22 limitations of, 354–355 securitization of assets, 22–23 Van Reenen, J., 262 structure in the 1970s, 17–18 Venad, 59 traditional broker–client relationship, VenRock, 65, 100 19 venture capitalism unintended consequences of deregulation, arbitrage and, 79–80 22–23 conventional model, 120–121 women and, 19 decision-making methods, 72 yachts anecdote about, 19 dependence on speculation, 90–96 Wall Street Journal, 165, 172 dependence on the state, 96–101 Wal-Mart, xxvi evolution as an industry, 86–89 war First Law of Venture Capital, 82 economic conditions after, 19–20 limited scope of investments, 96–97 economic consequences, 249 maturing of capitalism and, 78–86 justification for state action, 266 nature of venture-backed IPOs, 91 See also specific wars persistence in venture capital returns, war bonds, 226 95–96 Warburg, Eric, 102 Second Law of Venture Capital, 82 Warburg, Max, 102

424 / Index

Warburg, Paul, 102 great corporations and, 255 Warburg, Felix, 102 Wellington, Duke of, 161 Warburg, Siegmund, 103 Westinghouse, 228 Warburg Pincus Wharton Model, 36 arbitrage opportunities, 140 Whig Party, 250 author’s arrival at, 101–107 Whitney, Richard, 17 author’s role in, 30 Whittemore, Fred, 69 BEA Systems and, 130–131 Wikipedia, 305 BEA Systems IPO, 136–137 Wilson, Woodrow, administration, 226, Covad and, 214–217 255–256 first $100 million venture fund, 32 Winston, Pat, 46 first leveraged buyout of a technology Winter, Sidney, 104 company, 105 Wired magazine, 222 founding of, 102–103 Wolf, Martin, 318–319 OpenVision Technologies and, WordPerfect, 68 120–124 WordStar, 65, 66, 68 partner rewards structure, 121–122 Works Progress Administration (WPA), return on investment in BEA Systems, 282–283 141–142 World Economic Conference, xxxi shifting value sources in technology, World Economic Forum, xxxi, 344 312 World Trade Organization, 328 within the dotcom/telecom bubble, World War I, 255 214–217 reparations following, 24 Warner–Lambert, 33 World War II, xxii, xxiv, 243, 268, Washington Consensus, 290 291, 334 Washington University, 180 aftermath of Pearl Harbor, 320 waste Controlled Materials Plan, 25 absence in efficient markets, 352 mobilizing science for war, 42 good and bad types of economic waste, transformation of the Innovation 352–353 Economy, 257 Innovation Economy and, 1 World Wealth and Income Database macroeconomic waste, 352–353 (WID), 359 microeconomic waste, 352–353 WorldCom, 115 neoclassical economics and, xxxiii, 9 WPA. See Works Progress tolerance in the Innovation Economy, Adminstration (WPA) 90 Wright, I., 355 See also Keynesian waste; Wright Aeronautical, 228 Schumpeterian waste WTF? What’s the Future and Why It’sUp Watergate, xxx, 21, 31 to Us (O’Reilly), 295 Watson, Mark, 191–192, 197 Watson, Tom, Jr., 260 Xerox, 26 Way We Live Now, The (Trollope), 164 acquisition of Scientific Data wealth distribution inequality, 359–361 Systems, 65 Weatherstone, Dennis, 71 failure to exploit PARC’s innovations, WebLogic, 137–139 48 Weimar Republic, 284 inability to exploit innovations, 341 Weinberg, Sidney, 18 patent monopoly, 255 welfare economics, 353 patents, 313 welfare state, 258 research laboratory, 255

425 / Index

return on innovations from PARC, Young Plan, 24 48–51 YouTube, 305 See also Palo Alto Research Center (PARC) Zeckhauser, Richard, 355 Xi Jinping, xxxi, 344, 345, 348–349 zero-hour contracts, 299 Xiong, Wei, 196–197, 343 Zilog Semiconductors, 105 Zingales, Luigi, 370 Yale University, 13 Zucman, Gabriel, 332 Yom Kippur War, 36 Zweig, Jason, 19