Janeway Institute Launch Event

Professor Stephen Toope, Vice-Chancellor, University of Cambridge

Good afternoon everyone and welcome to the launch of the Weslie and William Janeway Institute for Economics, and I want to warmly welcome our guests of honour, my friends Weslie and Bill. I would also like to thank all of our speakers and the panellists taking part in our virtual Round Table. As with so much of life nowadays blending the physical and the virtual makes it possible to enrich this event with participation from around the globe and I'm very pleased that you all could join us.

In 2012 the Cambridge INET Institute was founded thanks to major philanthropic investment from the Institute for New Economic Thinking, or INET, a non-profit New York City-based think tank, which Bill co-founded. The global financial crisis had revealed such serious cracks in the system that many were left wondering what had gone wrong, as well as when and how. INET support enabled the Faculty of Economics to bring its long tradition of frontier thinking to bear on its investigations of the issues that were shaping the modern economy. Cambridge INET has since distinguished itself at every turn and become a hub for researchers across disciplines. It has fostered the discussion of new topics in unexpected ways, discarding traditional boundaries.

Thanks to Weslie and Bill's generosity, the Institute's important work will now continue long into the future. The new Janeway Institute for Economics will invest in shaping young minds, transforming economic research and disseminating its findings at Cambridge and far beyond. I am deeply grateful for Weslie and Bill's generosity and vision in helping to maintain the university's leadership in new economic thinking. As you all know Bill has a close and long-standing relationship with Pembroke College and the Faculty of Economics, where he completed his PhD. The extraordinary scope of Weslie and Bill's involvement across the whole collegiate university has significantly benefited a wide range of students and programs. Among many other distinctions they are members of the Guild of Cambridge Benefactors, and in 2009 they were jointly awarded the Chancellor's 800th Anniversary Medal for outstanding philanthropy. Bill has continued to serve, first on the board of Cambridge in America, and still today on the Campaign Advisory Board, where I treasure his deep experience and wisdom. I am delighted and very grateful that the Institute will continue in their name and I can simply think of no better fit.

New and evolving economic questions will always be with us: Brexit, Covid-19, the climate crisis, indeed, whether we will find petrol when we next pull up at the pumps. All spell changes large and small to the way we live. Economic thought must deal with these and many other issues as it grapples with unexpected developments, unruly complications and, the least predictable of all variables, humans. A complex world demands research and solutions that are, above all, flexible, and agile. Flexibility has been one of Cambridge INET’s strengths. For example, the postdoctoral research program has allowed young researchers the freedom to pursue their own research interests while integrating into a wider multi-disciplinary set of research groups. Thanks to the endowment of the new Institute, this unique and powerful agility and responsiveness can develop further. Research will be able to reflect issues as they arise. New directions might include inequality, climate change, epidemics, gender, the digital economy, or the impact of automation and machine learning.

 The Janeway Institute is partner to one of the most venerable and storied economics departments in the world. Now it will help us tell new stories, advance research frontiers in economics, and shape the international narrative of our economic future. Thank you Bill, thank you Weslie, for your generosity. Please join me now in welcoming Bill to say a few words.

Dr. William Janeway, Founder

Thank you Vice Chancellor. Thank you very, very much. As the Vice Chancellor said, it is almost exactly 50 years ago that I received my doctorate from the Cambridge Faculty of Economics. I had written my thesis – and you'll see why this is relevant – on the formulation of economic policy from 1929 to 1931. My supervisor was Richard Kahn, and I was in a faculty that was then peopled by a generation that included Joan Robinson, Nicky Kaldor, Piero Sraffa, and many others of great distinction. Those four years leading up to that dissertation being accepted changed my life. From that thesis, and from the experience of interacting with those economists, I took away three lessons  – three lessons that are deeply, deeply ingrained in my brain.

The first: the interdependence, the complex interactive interdependence, of the financial system and the real economy, and how that complex set of evolving, never stable dynamics induce a certain kind of systemic fragility that one must always be on the outlook for, as all participants in markets, in policy formulation, necessarily operate under conditions of more or less radical uncertainty with respect to what the full consequences of their decisions will prove to be.

Well, I took those lessons on a 35-year sabbatical. I took them to a world in which any ability to make a dent on the real economy is critically dependent on access to finance and the terms on which that access is available, a world in which all efforts are subject to existential uncertainty of an extreme kind and where fragility is very much a way of life. That is the world of venture capital.

Now, in the late 1990s it happened that one of the most extreme moments of the intersection of the dynamics of the financial system, of the stock market, and the venture capital efforts to induce and drive change in the real economy reached a maximum, and at that point I did recall the work I had done on 1929. So, in 1999 I could say to myself and my partners: “You know, I've seen this movie before. I know how it ends.” Thank you, Cambridge, thank you very much. And that's where, if you like, the notion of giving back really began to take shape. Some few years later Weslie and I established residence here in Cambridge. We did so just in time for the global financial crisis to validate, in extreme, those lessons I'd learned studying the world of 90 years ago, from 50 years ago.

The crisis represented a kind of binary challenge. Was it a threat to one's work, one's life, one’s ways of thinking? Or was it an extraordinary opportunity, opening up channels and dimensions of research? And it turned out, which is not going to surprise anybody here, that there was a critical mass of people in the Cambridge Economics Faculty who did see it as an opportunity. And over the course of some years, beginning first with an event that I discovered while I was living in Cambridge, in a full-page advertisement in the Financial Times, that a new outfit that I'd never heard of, called the Institute for New Economic Thinking, was going to have a launch event at King's College, Cambridge, and it listed the founding members of the Board, among whom was a chairman named Anatole Kaletsky, who I'm delighted to say is sitting right here and whom I'd known in his super high-end journalism on economics and finance for some years. I got in touch with Anatole, who in turn introduced me to Rob Johnson, the President of INET, with whom I had a conversation that continues now, a decade later, about the challenges and the opportunities of how the economic and financial world had evolved for the discipline of economics. So I became engaged with INET, and very early on realized that as INET was working to establish leverage in the discipline and on the discipline, that Cambridge represented a remarkable venue, a remarkable place. I began a conversation, I introduced, I should say, the then Chair of the faculty Hamid Sabourian to Rob Johnson, and over the course of, I would say it must have been about 18 months (I may stand corrected by one or more of the people in this room), the faculty did something which some might find astonishing: it reached a consensus, on research priorities and themes, which took the form of a document – an extended document – a proposal to INET, which I re-read today. And it identified four principal areas where Cambridge had something distinctive to bring to the table, that was relevant to the challenges generated by the global financial crisis. To be specific, a theme on networks, crowds and markets, yes indeed, led by Sanjeev Goyal; the transmission mechanisms through which economic policy impact the real economy. Giancarlo Corsetti was the leader of that initiative. Information, uncertainty, incentives, the microeconomics, that really went behind the facade of behavioural economics, where Hamid Sabourian and Chris Harris had been doing extraordinary work for years. And then drawing on the, I really might say, unique history of Cambridge in econometrics, going back to Richard Stone, the empirical analysis of financial markets that Oliver Linton led through the development of this programme, and has led since, with enormous distinction. So, Cambridge INET was established on the basis of that proposal, embedded in the faculty. That was really important, because over this now almost decade, it's been an engine of innovative thinking, as the Vice Chancellor said, for bringing visitors to Cambridge, bringing postdocs, and then for a host of conferences, publications, reaching out from Cambridge to the world, bringing Cambridge back into the top level of discussion, as economics continues to evolve.

Cambridge INET has prospered under three successively successful directors: initially Sanjeev Goyal, then Giancarlo Corsetti and now Vasco Carvalho, who I'm just so thrilled is leading and overseeing and driving the passage from Cambridge INET to the new institute, a renewed engine for creative research endowed in perpetuity to carry on and extend the work of Cambridge INET and to allow for continued evolution, both intellectually and institutionally, within Cambridge and for economics in the world.

Professor Tim Harper, Head of School of HSS

I'm delighted, as Head of the School of the Humanities and Social Sciences, to be here to celebrate the launch of the Weslie and William Janeway Institute for Economics. Through Weslie and Bill's generosity, programmes begun under the Cambridge INET Institute will continue to flourish and to grow in new directions. This is also, as the Vice Chancellor has said, a transformative initiative for the entire Faculty of Economics, of which Bill has been an active member now for many years, as it constantly seeks to renew itself and through its research contribute to global understandings of change and uncertainty. Not only is this a timely initiative, it is an urgent need. Led in no small measure by the Cambridge INET, the Faculty is committed to making its research more swiftly available. The Institute's webinars, working papers, podcasts and research videos have championed outreach in innovative ways. This has been especially important during COVID times, of getting relevant research findings, for example, on COVID supply disruptions, capital flow, household spending, the changing labour market, all out to the widest possible audience. This sense of urgency has also been evident in the institution’s investment in post-doctoral researchers. The support of emerging talent, particularly of younger scholars in these difficult conditions, I know is a key aspiration for Bill and Weslie. By this and by bringing both senior and early career visitors to Cambridge, the Institute will make a crucial commitment to renewing the field, to sustaining global mobility of ideas and talent, at a challenging moment for both. And above all in encouraging research work that anticipates new futures.

The School of the Humanities and Social Sciences is a large assemblage of research institutions. It is home to ten faculties and departments, whose research ranges from the deep history of humanity to the most immediate public policy concerns. The School teaches around 30 percent of the university's undergraduates and half of its taught Masters students. It hosts the flourishing constellation of research centres and two museums. Hallmarks of all this work are a global approach to research in key areas, such as history and heritage, governance, sustainability and inequality, and the constant challenge to intellectual boundaries. But within this constellation the new Janeway Institute will be central to our strategic ambitions to facilitate and expand interdisciplinary research, into challenging new areas, particularly at the interstices of economics, law, public policy and digital science, and of ensuring its global impact. As an historian, I am especially excited by plans at the interface of economics and history. Bill after all, as he's just reminded us, began his own research career as an economic historian, and so we historians can claim in this one of our own.

Fruitful conversations are already underway, for example, in the use of big data, that stresses the importance of perspectives over the long historical duration. I know interdisciplinarity is a guiding theme of Weslie's own scientific work and wide societal commitments. The new Janeway Institute will impact right across the humanities and social science disciplines. It is a tremendous opportunity for us all in Cambridge. I salute Bill and Weslie's most generous and farsighted vision. It is a privilege to mark the formal opening of the Institute and to anticipate its exciting future.

Professor Leonardo Felli, Chair, Faculty of Economics

Good afternoon and good evening, good morning – depends on where you all are at the moment. As Chair of the faculty, I'm absolutely delighted at today’s inauguration of the Weslie and William Janeway Institute. The Janeway Institute is, and will always be, a key pillar of the research, education and impact activities of the Faculty of Economics here at Cambridge, and we are deeply grateful to Weslie and Bill for their amazing support, help, and for making this possible.

Indeed we are confident the Janeway Institute, building on the past 10 years of the Cambridge INET, will provide the incentives and support within the faculty to address the greatest questions in economics, by exploring them in order to identify, not the most popular answer, but the most careful answer, to use Morishima terminology.

By helping us nurture the next generation of researchers and postdocs, and by making sure we address key issues, that have certainly considerably expanded in recent times, starting from understanding, as Bill mentioned, the most recent economic crisis, the consequence of a devastating pandemic, the effects of certain political decisions, Brexit the biggest that comes to mind at this stage, and the need to address key and potentially devastating challenges first. First among all, climate change.

All these goals will be achieved by the existing teams of the Institute, spanning from macroeconomics to finance, from networks to game theory, from international trade to econometrics. We are also confident that in the near future this team will evolve so as to be able to address new and upcoming questions. Indeed, we are building on the work and support of the Institute in exploring the research questions which are at the boundaries of the discipline, such as economics and finance, one of the key missions of the Institute, as was clarified by Bill, and economics and data science, one of the newest challenges, both in terms of research and education within the faculty. It is the support and the dynamics and productivity of the research environment of the Janeway Institute, that is going to make this research and education agenda possible. And there is no other way to say this but to acknowledge that we will forever be indebted to Weslie and Bill for their support, incredible help in pushing and moving us in these directions. And on this without further ado, let me now leave the screen and the floor to the Director of the Janeway Institute, Professor Vasco Carvalho.

Professor Vasco Carvalho, Director, Janeway Institute

Unlike the other speakers I'm going to have a few slides. Because you've been hearing these buzzwords of what we want to be - an international hub (with) continued investment in the next generation of researchers and a place to produce frontier research, I want to convince you and reassure you that there is a lot of continuity in those statements, and there is change.

So the continuity for everyone listening at home, for the generations of alumni of Cambridge: you will notice and you will know, that Cambridge Economics was never the faculty which had individual members and atomized researchers. It was a hub and it will be a hub.

So I couldn't resist, and please ignore the first few lines, but this is a letter from Joan Robinson to Bob Solow, and I want to draw your attention to the familiarity of the last phrase. “I would not be so unkind if you would not be so pig-headed. Looking forward to seeing you in 1961. Sincerely, Joan.” This is brought about by familiarity, not by individual peddling of your latest paper, or your latest idea, but about being with people, discussing, knowing, having the confidence to acknowledge the fact that you don't know what you're saying, that the other person doesn't know what they're saying.

The second, and we'll have an example in a panel, is the long tradition of nurturing and investing in the next generation of researchers. So, we'll hear from Joe Stiglitz, and Joe started a career at Cambridge in a college, in what we would today probably call a postdoc. Joe is one of the many examples in the profession of people that passed by that were integrated, that interacted and that maintained close links to Cambridge throughout. And this is what the Janeway Institute will keep on doing. And it has always been a cacophonous, a chaotic, a plural research environment, that is kind of always, sometimes orthodoxy, sometimes the heterodoxy, sometimes the leader, sometimes the follower, but always pushing to redefine research frontiers, and make economics relevant. And that's what we're here to do. This opens a very long land a very big lens onto the role of the collegiate university, but also the role of Keynes and Stone, the department of applied economics, where I started research as a research assistant. I say “Hi” to Andrew Harvey online.

This mantle was taken over by Cambridge INET in many ways, so what Cambridge INET did was pick up each of these and reinvigorate economics at Cambridge and reinvigorate its interactions with the world. So as the last director of Cambridge INET I just want to put some numbers on the board. You'll be able to read them. You know economists suck at accounting, so they are broadly correct to, what, plus or minus two percent, probably. But what this has done is revitalize the faculty, revitalize conversations within the faculty, and with the faculty to the outside world, to have a constant flow of people across the sciences, across the globe, across themes, and then pass on this to a next generation of researchers. And in the end, output that into working papers, into conferences, into discussions, into impact, into REF case studies, into real world discussions.

And with that, I should pause and actually take a moment to thank all the partners of Cambridge INET. INET New York, of course, but also the Keynes Fund, Mohamed A. El-Erian and Queens College, the Isaac Newton Trust and, of course, the Faculty of Economics. And in particular, some people that need to be thanked by name, apart from Bill and Weslie, of course.

Hamid for his role in bringing Cambridge INET to fruition; Sanjeev as the initial director; Giancarlo Corsetti, as the follow-on director, and co-ordinators, that are many, are in the room. And I’ll just mentioned the ones that are not, that have moved on, like Professor Hamish Low, Kaivan Munshi, Coen Tuelings, and thank everyone, not the least Rob Johnson, back in New York, the advisory and the management. So this is important shopkeeping because this is the life and blood of many hours of trying to develop a research environment that is exciting and that is outward looking. And with that, and I should not forget the staff, past and present, including Marion and Anna, that put all this together.

With that, what are we going to be doing? We're going to be doing cross-cutting research. We are obsessed with themes that cross across, cut across, the usual silos of macro/ micro, econometrics, and try to join up researchers, both inside the faculty, across Cambridge and across the world, and across disciplines, to understand, you know, what does it mean to be an individual in an interconnected society, what does it mean to understand aggregate outcomes in a world that is built up from all the interaction of these micro units, and how does macroeconomics come about in that world? What do you do when you have trillions of data points? Fundamentally, technically, how do you make sense of the world of a data rich environment, and thinking always back to fundamentals and to the foundations of economics, in the sense of what is human choice, what is human behaviour, what is information, what is learning, what is incentive?

We are already advertising for the next generation of Janeway Institute postdocs. We are continuing to commit resources to the PhD program at Cambridge, where we will remain outward looking and fostering interactions through many, many different ways. And I think, as someone has said, I think that the big difference, certainly with the latest stages of the DAE and Cambridge INET itself, is that this is no longer a grant, this is an endowment in perpetuity. And what endowments in perpetuity allow is that they are not connected to individuals or fleeting research agendas. They allow you to renew and to address new questions. So we're trying to build up, to kind of meet that novel flexibility that the endowment allows, by having in-built mechanisms that propitiate continuous change, that has input from externals, that has oversight by external advisory boards and also, seeking new partners and continuously seeking new directions. And that means through grants, through joint ventures like the Bennett Institute, like the collaboration of the Bennett Institute that we just started last year, through donations, enlargement of endowment, all of those are a continued process of injecting resources to open up new initiatives, new dialogue and new themes, that reflect both Cambridge-based economists’ evolving strengths, but also societal concerns at large.

And with that I'll leave you to explore the website. I'll leave you to explore twitter and I'll leave you to take a break, and we'll come back for a panel discussion. Thanks a lot.

Thank you very much. We're going to cap off the official launch with a panel. Given the day and age we are doing this virtually and reaching to friends around the globe. We'll have with us Professor Hélène Rey from the London Business School; we'll have Professor Hyun Song Shin, currently at the BIS, and Professor Joseph Stiglitz at Columbia. Professor Antoinette Schoar (MIT Sloan School of Management) had a last-minute problem. She sent a video, so she will still engage in the discussion, though she will obviously not be there for Q and A, after that.