The digital revolution and the State
Abstract: The Digital Revolution was fostered and funded by the state, specifically the American Department of Defense. It has now matured beyond any need for continued state sponsorship. In fact, is now challenging state authority as it disrupts established markets and their supportive ecosystems of regulations. Digital entrepreneurs need to study the institutionalized history of the markets they are addressing as their technologically friction-free services encounter economic, regulatory, and cultural frictions that slow down deployment (and, incidentally, threaten the valuation of the Unicorns). Moreover, the digital revolution is far from over: its partial and incremental implementation helps explain the “productivity puzzle,” as was the case with electrification 100 years ago. Finally, access to big data has generated a new engine of monopolization, since more data means better service and better service provides access to more data. Along with the role of social media in undermining the integrity of political process on which state legitimacy rests, this inevitably creates demand for regulatory responses that remain more visible in Europe than in the United States.
William H. Janeway is a Senior Advisor and Managing Director of Warburg Pincus. He joined Warburg Pincus in 1988 and was responsible for building the information technology investment practice. Previously, he was executive vice president and director at Eberstadt Fleming. Dr. Janeway is a director of Magnet Systems, Nuance Communications, and O’Reilly Media. He is an Affiliated member of the Faculty of Economics at Cambridge University. Dr. Janeway is a member of the board of directors of the Social Science Research Council and of the Field Institute for Research in the Mathematical Sciences and the board of governors of the Institute for New Economic Thinking and of the Advisory Board of the Princeton Bendheim Center for Finance. He is a member of the management committee of the Cambridge-INET Institute, University of Cambridge and a Member of the Board of Managers of the Cambridge Endowment for Research in Finance (CERF).He is the author of Doing Capitalism in the Innovation Economy: Markets Speculation and the State, published by Cambridge University Press in November 2012. Dr. Janeway received his doctorate in economics from Cambridge University where he was a Marshall Scholar. He was valedictorian of the class of 1965 at Princeton University.