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Published: May 28, 2013
 / Summer 2013 / Issue 71

 
 

The Practitioner’s Tale

BEA is a perfect example of how Janeway’s three-player game unfolds. The U.S. Defense Department funded the basic research that brought the Internet into existence. AT&T built the key technology, the Unix computer operating system, but was unable to take advantage of its single most valuable asset once its monopoly was broken up. IBM, unwilling to cannibalize its proprietary products in order to enter the new world of open systems, retreated at a key moment. So Warburg Pincus and its managers were able to enter the fray, cobbling together a new company to meet a demand at just the right time and selling it to investors. Larry Ellison then picked up BEA after the bubble burst, and folded it into his company, Oracle.

This narrative may be the right way to think about the last 40 years, but Janeway acknowledges that the three-player game is not standard economics. That isn’t stopping him from predicting that the “low-carbon economy” will be the “next new economy.” Nor is it stopping him from seeking to inflate the bubble that new economy could create by positioning climate change as an external threat equal to Communism in the 20th century, and by suggesting that we turn energy policy into “the economic equivalent of war.” And so the three-player game begins again.

Author Profile:

  • David Warsh is the proprietor of www.economic principals.com, an independent economics journalism site. He covered economics for the Boston Globe for 22 years and is a two-time winner of financial journalism’s Gerald Loeb Award.

 

 
 
 
 
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