By Mariana Mazzucato
Who really creates wealth in our world? And how do we decide the value of what they do? In modern capitalism, value-extraction - the siphoning off of profits, from shareholders' dividends to bankers' bonuses - is rewarded more highly than value-creation: the productive process that drives a healthy economy and society. We misidentify takers as makers, and have lost sight of what value really means.
Yet, argues Mariana Mazzucato in this penetrating and passionate new book, if we are to reform capitalism we urgently need to rethink where wealth comes from. Who is creating it, who is extracting it, and who is destroying it? These questions are key if we want to replace the current parasitic system with a capitalism that works for us all. The Value of Everything will reignite a long-needed debate about the kind of world we really want to live in.
Jamie Whyte on CapX ("For Popular Capitalism") wrote:
"This book’s big point is that it is far too easy for those operating in the market economy to get rich by extracting economic value from those who add it, not by adding it themselves. [...] It is not just finance that is in the dock. Mazzucato also attacks what is going on in more obviously beneficial sectors of the economy, such as information technology and pharmaceuticals. [...] A fundamental thesis of the book is that mistaking value extraction for value creation, and vice versa, has its roots in the errors of economists. [...] the book has three significant strengths. First, Mazzucato pushes us to get away from the simplistic creed that markets are always good and governments always bad. Second, she offers the Left a positive goal of prosperity-inducing innovation rather than a sterile and ultimately destructive politics of resentment and redistribution. Finally, she forces us to ask ourselves what adds value to society and how to create an economic and social order that promotes that. The book itself adds value by forcing us to confront these points."
Philip Collins on The Times wrote:
"Her central thesis is that many people have become rich over recent decades not by creating value but by extracting it – financiers and internet entrepreneurs, among others. We have failed to see this because we are wedded to the false idea that “price determines value”. More specifically, we are fixated on the “marginalist” theory developed in the late 19th century by economists such as Stanley Jevons and Alfred Marshall [...] Mazzucato’s failure to refute marginalism, or to offer any coherent theory of value of her own, undermines her subsequent claims about who is making and who is taking, who is a producer and who a mere rentier. These assertions are entailed by no theory of value; they are the personal judgements of Mazzucato about who is deserving and who not."
"Predictions of the end of capitalism are as old as capitalism and Mazzucato does not write as its enemy. On the contrary, she is the sort of critical friend it needs and she is nothing like as radical as her political adoption would suggest. [...] Her solutions are part-voluntary and part-coercive. Companies should behave better but the incentives — in executive pay, taxation and regulation — all point in the wrong direction. Government, she says, ought to be less craven in the face of the financial and the tech giants. Generally, though, this is a book longer on analysis and diagnosis than on solutions."
Extensive overview of reviews of and media appearances on the book (link to the website of the Mariana Mazzucato)
5-Minute Video with Mazzucato on Value Theory & Economics
More time available? You may also want to look at this 20-minute talk where she goes over the main ideas in the book or watch this longer (1-hour) lecture plus discussion.
Extracts from the Book
- Capitalism's greatest weakness? It confuses price with value
- It's a magic number; Value creation versus Value extraction
Table of Contents
- Preface: Stories about Wealth Creation
- Introduction: Making versus Taking
- A Brief History of Value
- Value in the Eye of the Beholder: The Rise of the Marginalists
- Measuring the Wealth of Nations
- Finance: A Colossus is Born
- The Rise of Casino Capitalism
- Financialization of the Real Economy
- Extracting Value through the Innovation Economy
- Undervaluing the Public Sector
- The Economics of Hope
About Mariana Mazzucato
Professor Mariana Mazzucato (PhD) holds the Chair in the Economics of Innovation and Public Value at University College London (UCL), and is Founder and Director of the UCL Institute for Innovation & Public Purpose (IIPP). She is winner of the 2014 New Statesman SPERI Prize in Political Economy, the 2015 Hans-Matthöfer-Preis, and the 2018 Leontief Prize for Advancing the Frontiers of Economic Thought. She was named as one of the ‘3 most important thinkers about innovation‘ by the New Republic.